Reverse Mortgages or Seniors Finance are loans which allow you to borrow an amount of cash against the agreed value of your home. You do not need to make any repayments during the life of the loan.
A normal Bank loan, or forward mortgage, is based on your income and your ability to make repayments.
In the case of a reverse mortgage, it is the agreed value of your home that acts as the security for the amount you borrow. Interest on this loan is accrued monthly throughout the length of your loan.
No repayments are needed while you live in your home and you can live there for as long as you choose.
The loan must be repaid when you either permanently move out of the home,move into ongoing aged care or upon death.
How Much Can I Borrow on Reverse Mortgages Home Loans ?
As with all reverse mortgages, the amount you can borrow is based on two key factors:
- the agreed value of the property, based on an independent valuation
- the age of the youngest borrower.
Pros and Cons of a Reverse Mortgages Home Loan
Advantages of Reverse Mortgages
- No restrictions on what you use the money for. Money for Living.
- No regular repayments required.
- You retain ownership of your property.
Why would I not want a Reverse Mortgage Home Loan?
- Compounding interest has a significant impact over the long term.
- Your Beneficiaries’ inheritance may be affected.
Call Channel Direct Home Loans Today for a chat about reverse mortgages or anyother home loan products you may be interested in and one of our accredited consultants will explain the differences and help you choose the loan that most suits your needs.
Who Sells Reverse Mortgages ?
There are several providers of Reverse Mortgages that include major lenders andnon Bank Lenders.
We only recommend reverse mortgage products by lenders who are members of SEQUAL (Senior Australians Equity Release). SEQUAL is the self-regulatory body of the reverse mortgage industry, dedicated to the protection of borrowers and the promotion of responsible equity release lending options.
Contact our Credit Adviser for assistance!
Key Information about Reverse Mortgages
A REVERSE MORTGAGE MAY NOT BE SUITABLE FOR EVERYONE.
WHAT ARE THE ISSUES TO CONSIDER IN DECIDING IF IT IS RIGHT FOR YOU?
How will the loan affect future choices?
- When thinking about a reverse mortgage, you need to consider both your current and
future needs. The more you borrow now, and the younger you are when you borrow
it, the less equity you will have in your home to pay for your needs as you age. How
might your health and living situation have changed in 10, 20 or 30 years’ time? If you
use up too much of your equity too soon, you may not be able to afford future costs
such as high medical expenses, the need to move into aged care accommodation,
essential home maintenance or the purchase of a motor vehicle.
How much will you have to repay?
- You can only estimate how much you will end up owing. The exact amount to repay
will depend on how much money you borrow, the interest rate and how long you
have the loan, and the value of your home when it is sold.Will I owe more than hat
home is worth?
- By law, lenders must guarantee that when your reverse mortgage contract ends and
your home is sold to repay the loan, you will not have to pay back more than the
value of your home. This is known as a “no negative equity guarantee”.
There are a few exceptions to this rule.ill other people living in
- 1. Generally reverse mortgages have to be repaid when you move out (for example, into
aged care) or die. If you are the homeowner and someone else is living with you, the
other resident may have to move out when the loan has to be repaid. Some reverse
mortgage contracts may protect the rights of the other resident by allowing them to
stay in the home. If you want this option, make sure you discuss this with your lender
before taking out a reverse mortgage.
- 2. A reverse mortgage will reduce the amount of equity in your home you can leave to
your children or other beneficiaries. You may wish to discuss this with your family.
- 3. There may be alternatives to taking out a reverse mortgage that may be more suitable
for your needs. These can include downsizing, making arrangements with other family
members, accessing government benefits, loans (such as the pension loans scheme)
using savings or selling other assets or home reversion schemes.
- 4. Break fees may apply when a fixed interest reverse mortgage is ended early. Break
fees can be very high. Depending on the size of the loan and how long you have had
it, these fees may be thousands of dollars.
Note: inclusion of this box is not required for reverse mortgages with no break fees.
- 5. A reverse mortgage may affect your pension or other Government entitlements. You
can contact the Department of Human Services (Centrelink) on [Note 1] to talk to a
Financial Information Service Officer about how your pension may be affected.
Note 1: Provider to insert the Department of Human Services number.
SOURCES OF OTHER INFORMATION
ASIC’s MoneySmart: To find out more about reverse mortgages, including a reverse mortgage calculator to help you
work out how much equity you may have in the future, visit the Australian Securities and Investments Commission’s free consumer website at www.moneysmart.gov.au or call [Note 2].
Note 2: Provider to insert the ASIC Info line number on 1300 300 630