A Reverse Mortgage is available to assist older Australians enjoy a better quality of life in retirement by unlocking the wealth in their homes.
Reverse mortgages are also known as Senior’s Finance or Seniors Loans and are a type of loan that allows older Australians to borrow money using the equity in their home as security.
A reverse mortgage loan can be taken in the following ways:
Once a reverse mortgage loan has been approved and settled the funds can be used for whatever purpose you choose; for example you might want to do home improvements or repairs, travel, upgrade to a new car, pay for medical procedures, or to assist with care around the home. Speak to your local mortgage broker to find out if this product suits you.
Interest on a reverse mortgage is charged just like any other loan, but the difference with a reverse mortgage is that whilst you are living in the home no regular payments are required.
You will be charged interest on the loan amount you borrow. Fees and interest are added to the loan balance as you go and the interest compounds. This means you will pay interest on your interest, plus any fees or charges added to the loan.
Over time, the amount you will owe the lender will increase and the longer you have the loan, the more the interest will compound and the bigger the amount you will have to repay.
The loan must be repaid in full under the following circumstances:
The amount you can borrow is based on two key factors:
As there are no monthly repayments required, it is not necessary to demonstrate sufficient income to repay the loan, however credit providers are required by law to lend money responsibly, so not everyone will be able to obtain this type of loan.
To apply for a reverse mortgage, you must be a homeowner.
As a reverse mortgage can affect the value of your final estate, it’s important that you discuss your plans with your family members, as well as seeking independent financial advice.
To help you see if a reverse mortgage loan could be the right choice for you, visit Asic’s Money Smart website Reverse Mortgage Calculator.
Contact or call Homeloans Plus today to learn more about reverse mortgages or any other home loan services that you require.
All content is general in nature. Before undertaking any financial decision, please obtain personal financial advice that is tailored to your situation and is documented in our credit guide.
Jeffrey Parker is an authorised credit representative (Credit Representative Number 394045) of Custom Equity Group Pty Ltd (Australian Credit Licence Number 383666).
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