Which works best for you?

During the last 15 years, the Canadian housing market has continued to grow at a steady pace. In the US the housing crash of 2008, rising home prices, low-interest rates and abuse of HELOC’s are often cited as the perfect storm that created the downfall. Mortgage Professionals Of Canada have stated that according to a report from their Chief Economist (William Dunning), 1.91 million Canadians have a HELOC. A Home Equity Line of Credit allows you to draw funds as you need them and is a convenient way to pay for ongoing projects or for multiple cash needs. You pay interest only on the amount you draw. HELOCs often begin with a lower interest rate than a traditional line of credit, but feature variable rates which rise or fall according to the movements of an interest rate benchmark. That means your monthly payments can rise or fall as well. Many HELOCs also allow interest-only payments during the initial draw period, after which principal and interest payments are required. Term-limited home equity lines of credit can mature, with the remaining balance plus accrued interest becoming immediately due, for example, at the end of 10 years.

With Sell ‘n STAY™, you sell your home to an investor and then lease it back from them. This way, you get all the equity from your home in the form of cash and then you have the freedom to use the money as you please. Because your home is sold, those funds do not need to be paid back. The only interest would be the interest you earn if the funds are invested. Picture this scenario: You want to build your retirement home on a lake in cottage country. With the Sell ‘n STAY™ program, you can sell your home and use the funds to purchase land and build your custom dream home all while remaining in your current home for as long as it takes. This way you only need to move once! Others have also used the program to pay off debt, fund new businesses and fund their retirement.

HELOCs are relatively easy to open if you have a lot of equity in your home. You can borrow up to 80% of the home’s equity with the interest rate being lower than a second mortgage, and use it whenever you like. HELOCs typically have a life of 10 years, after which it becomes a regular home equity loan with amortized payments unless you renew it. A HELOC is a loan and must be paid back with interest compounded like a credit card. Without discipline, you might overspend and leave yourself faced with a large principal and interest payments during the repayment period. If the market crashes after this point, you may end up owing more than your home is worth.

With the Sell ‘n STAY™ program, you get access to 100% of your home’s equity and it’s not in the form of a loan. Because you’re renting the home back from the investor, you get to continue living in the home you love without the liability of owning it – you no longer pay property taxes or maintenance costs. You are able to redeploy the funds to your core focus, well-being or investments. Most importantly, should you pass away, your estate doesn’t need to sell the home – they just hand the keys back to the Landlord.

Both HELOCs and Sell ‘n STAY™ provide solutions to homeowners who need the equity from their homes. It’s always good to explore all your options before making a decision that involves your biggest asset – your home. For more information on any of these 2 programs, email me at tbaird@tbaird.com, or call me directly at 647-298-0997.