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32 - Sunday, July 20, 1986 - North Shore News

Property rich doesn’t

ARE YOU property rich but
income poor?

That's the situation of many
North Shore residents who bought
homes in the 1940s or 1950s for tess
than $10,000 — and who have seen
their property climb in value to
almost $200,000 mark. In the
meantime, however, they've
unable to save very much.

Now retired, they must rely
upon a small pension to pay the
bills. They don’t want to move
away from the family home.

There is one option currently
available to you if you’re in the
same situation, and other options
are on the way. .

Royal Trust currently offers
something called the ‘‘reverse an-
nuity mortgage’ plan. It allows
homeowners who own their prop-
erty outright to take out a mor-
tgage on the property, and use this
mortgage to purchase an annuity.
The annuity provides monthly
payments for five years.

money
matters
by Lisa
Smedman

If you take this option, at the
end of the five years, a mortage
will be outstanding upon: your
home. You will then be back in
debt. This may put you in the
position of having to sell the home
to pay off the mortgage.

The other option, to be called a
“home equity income plan’’ will
be offered by Signature Properties
Ltd. of Vancouver in anywhere
from a few months’ time to a year.
Still in the development stages, this
plan will take two forms, says
David Chaimers of Signature Pro-
perties.

Both types of plan will allow
you to both live in the family
home, and to, receive a monthly

income until you. die. In both
cases, the life insurance or finan-

cial company winds up owning the .

family home after you die — there
is no inheritance for the kids.

The first kind of plan will take
the form of a ‘‘reverse life in-
surance policy.’’ Under this plan,

you would put up your home as

collateral to receive monthly pay-
ments.

“Instead of you paying the
premiums to the insurance com-
pany, they would be paying them
to you,’’ says Chalmers. Upon
death, it is you who pays the life
insurance company a benefit — in
the form of your house.

“tls like a lien that's put
against the home,”’ says Chalmers.

If you live longer than average,
you come out ahead. If you die
early, the life insurance company
makes a hefty profit on your
home.

The second type of plan being
developed by Signature Properties
is more complex. Again, it will
provide you with money (a lump
sum, level monthly income, or in-
dexed monthly income) in return
for the company taking ownership
of the home upon your death. It
differs, however, in the way it is
calculated.

Instead of being based on the
total value of your home, this plan
will be based on just the ‘‘invest-
ment value’ of your property. The
“occupancy value’ of the home (a
figure that roughly represents how
much it would cost you to occupy
the home for your expected
lifespan) is first deducted from the
total value.

For example, your house might
be worth $100,000. But if you sold
it and moved out, it would cost

you $40,000 to rent, based on your
expected lifespan.

So the ‘investment value’? of
the home is $60,060. Divide this
figure by the number of months
you are expected to live, and
you've calculated your approx-
imate monthly income from the
plan.

Similar plans have been in ex-
istence in Britain ‘‘for several
years,’’ but are new to Canada,

“tw rE SITE

EATO

ways mean wealthy

says Chalmers.

Chalmers admits that property
owners can varn more money by
selling their homes outright and
investing the money, but points
out that this entails a mave away
from the family home.

For a free pamphlet that il-
lustrates how the plans will work,
phone Signature Properties at
684-2260.

'S

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For Reservation

Andy Traslin

The star carrier this week is Andy Traslin. He
delivers the Wednesday News in our Blueridge Zone.
He has been a carrier for nearly three years. The ser-
vice he provides is excellent.

Andy is 11 years-old and will be attending grade
6 at Plymouth School in September. A sports en-
thusiast, he enjoys skiing, hockey, baseball and tennis.

Andy has been saving his paper route money very
hard and he is now the proud owner of a Mountain

ike.

We appreciate having this fine young carrier work-
ing for us. For being our star this week, he received
2 complimentary movie passes, a North Shore News
baseball cap, and a special thanks for a job very well

lone.

THE VOICE OF WORTH AND WEST VANCOUVER

Ss

SUNDAY » WADNEBOAY ° FRIDAY

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