The pension age in Australia is now at 67 years, delaying a vital income stream for many hopeful retirees. A little over 80 per cent of Australian seniors own their home, which in most cases is their most significant source of wealth, one that you could liquefy for cash now without selling.
Bernie Lewis Home Loans have finance solutions for Australian homeowners aged 60 and over, looking to cash in on the equity locked in their home and increase funds for everyday expenses, or even long-awaited home improvements. A reverse mortgage is an option many could consider, potentially enabling you to solidify your financial position without waiting on the aged pension or downsizing the cherished family home.
A reverse mortgage basically enables you to borrow cash against the equity in your home, which is used as a security for the loan. Your age and the value of your home are the key measures to how much you could borrow. For those aged 60 years, you could borrow between 15-20 per cent of your home’s value. For each year over 60, you could add another 1 per cent to the margin.
You can take out the amount you borrow as a regular income stream, a line of credit, or a lump sum. You can also look at a combination of these options, depending on what suits you and your budget planning moving forward. A reverse mortgage might just be for you if you’re in need of a new air conditioning system approaching the summer season, or you could be looking to payout a credit card that is reaching hard for the limit.
No recurring repayments are required on the loan until you sell your home, or your estate is required to sell your home. Voluntary payments can be made into the loan, should you feel like winding back some of the debt before selling. Interest on the reverse mortgage loan compounds over time, increasing the end debt that needs to be repaid. Interest rates for a reverse mortgage, may be a little more than what you’d expect from a standard home loan product.
The amount you can borrow is carefully considered by the lender and your broker, to ensure enough equity is retained in the home for aged care and your estate. Reverse mortgages now (from 18 September 2012) have a negative equity protection, ensuring you can’t owe your lender more than what your home is worth.
As part of our process, a Bernie Lewis Home Loans Mortgage Broker will detail your reverse mortgage projections with you, displaying the impact of a proposed loan on your equity position over time. It is important to seek the appropriate independent legal and financial advice when taking on a reverse mortgage. You may even like to consult your family members, especially those included in your estate.
With everyday expenses continuing to sky rocket, simply chat with us and we’ll discuss the pros and cons of a reverse mortgage relating to your specific situation. Simply call (08) 8300 8300 or click our contact us button to speak with one of our skilled reverse mortgage specialists.
Every situation is different – this information has been prepared without taking into account your needs, objectives, or financial situation. If you are considering a reverse mortgage, we encourage you to understand how it may affect your personal circumstances – talk to friends and family, speak to professionals, and use the resources and tools Heartland has available.
