A Reverse Mortgage may be available to residential property owners over sixty years of age who are living in their own home. It can provide a source of funds by releasing some of the equity tied up in your property.
Download the Reverse Mortgage Information Statement
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Reverse Mortgage Calculator
A Reverse Mortgage calculator may help you work out:
- How much your debt will increase over time and what this means for the equity in your home
- How changes in interest rates and house prices could affect the equity in your home.
Access the Reverse Mortgage calculator here
A Reverse Mortgage can give you the freedom to do the things you have always dreamed of doing or to supplement your retirement cashflow.
What is a Reverse Mortgage?
A Reverse Mortgage is a product for those over the age of 60. It allows you to release some of the equity you have tied up in your home or investment property. It can be accessed as either a lump sum, or as a series of regular payments. It is a loan that does not need to be repaid whilst you live in the property and you can stay in your home as long as you like. The amount of equity you can access depends on your age and the value of your property. In general the older you are the more money you can borrow. You can use the funds for any purpose. You may want to utilize this type of product for funding a lifestyle you thought you could never afford. This could include such things as:
- Supplementing your superannuation or pension income
- Health care
- Funding your childrens' deposit for their first home
- Paying for your grandchildrens' education
- Buying a car
- Going on a holiday
How does a Reverse Mortgage work?
A Reverse Mortgage works in the opposite way to a standard home loan. Instead of the loan reducing with repayments, interest is applied to the loan and as repayments are not required the loan balance grows. The loan amount plus accrued interest is repaid upon sale of the property, or when the last living occupant, who is also a borrower, is no longer alive. In the case of joint borrowers, the age of the younger is used to work out the loan amount. The amount you can borrow is usually between 10% and 50% of the value of your home. As most lenders have a minimum and maximum loan amount, your Mortgage Adviser will give you the specific details on enquiry.
A valuation of your property will need to be done to establish the current market value. This is part of the loan process to ensure that the loan can proceed. Most lenders also provide a Negative Equity Guarantee. This Guarantee protects you and your beneficiaries so that in the case of falling property prices, your loan amount, including accrued interest and charges will not exceed the net sale proceeds of the property. This means that you will never have to repay more than the money you receive from the sale of your home.
We recommend that you also obtain independent financial and legal advice, as well as Centrelink advice, as a Reverse Mortgage may have long term effects on your finances and affect the amount of money you leave your beneficiaries. It is therefore important that you discuss this product with your family to keep them informed of your financial circumstances. One of our financial advisers can offer you financial advice on a Reverse Mortgage. If you wish, your Mortgage Adviser can arrange for you to meet with a Financial Adviser.
To learn more about reverse mortgages, speak with a Bernie Lewis mortgage adviser today by calling 8300 8300.
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