• Existing Home Owners
• First Home Buyers
• Retirees
• Commercial Property

RETIREES

Reverse Mortgages for retirees have been available in Australia for a number of years.  However, the growing need for them has brought them into focus recently, and now there are a much larger number of lenders offering this product.  The underlying purpose of this loan type is to provide retired people, who have equity in their home, access to money – cash to live on. 

A “REVERSE MORTGAGE” is obtained by a person who owns a property outright, monthly repayments are not made and interest is charged to the loan each month.  The loan has an increasing balance and is closed when the property is sold.  The borrower is not required to be earning an income and lenders do not require serviceability guidelines to be met.

When determining if a reverse mortgage is a good solution for you, consider the following points:

• Loan amounts.  Different lenders offer different loan amounts based on your age and property value.  This can affect the initial and future amount that can be borrowed.

• “No negative equity” guarantees.  Most reverse mortgage products have such a guarantee.  It means that when the property is sold and the loan balance is more than the sale price, the lender won’t seek a payment to cover the shortfall.

• Fees & charges.  All lenders use different fee structures combined with different interest rates to set the pricing for their products.  There are application fees, valuation fees, bank legal fees, ongoing fees and early repayment fees to name a few. 

It is important to understand the fee structures to determine which product would be best suited for you.  One lender may have a cheaper interest rate, but higher fees and charges. 

• Interest Rates.  Some lenders offer only a variable rate, and some lenders offer fixed rates over various terms.  A fixed rate may give you certainty; however you often pay a premium in the early years of the loan.

• Lump Sum or Income Stream. It is possible to have your loan paid to you as a lump sum, or to take a regular income payment or a combination of both.  Not all lenders provide this option.

• Pension entitlements.  Research the impact of this product on your pension entitlements.   Centrelink can help review your current situation, and the likely impact of  a reverse mortgage.

• Tenancy requirements.  Would you like family members to be able to live in the home once you have moved into a retirement home?  Or would you like to keep the home and rent it once you have moved?  Your intentions here need to be investigated and matched carefully to the product selected.

• SEQUAL Membership.  All members of Senior Australians Equity Release Association of Lenders (SEQUAL) have voluntarily agreed to adhere to the SEQUAL Code of Conduct.   SEQUAL is dedicated to assuring consumers and industry participants alike, of the quality and integrity of its members, and the way members conduct their business.