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Reverse mortgages are gaining in popularity as people look to retire and cannot always rely on their meager savings or their pensions to give them the lifestyle they want or deserve. You worked hard, probably brought up a family and now in your retirement years a reverse mortgage could make the difference between retiring comfortably or just existing.
For many retirees, the benefit of a substantial superannuation package is a dream. Family hardships, marriage breakdowns, failed businesses and redundancies, often mean that retirement is not what they expected.
Fortunately many Australians have done one thing right. They own their own home. In retirement there are few options available, but a reverse mortgage may provide an answer that may otherwise not exist.
Reverse mortgages allow you to unlock the equity (money) in your home, which for many Australians is their only real asset. Gaining access to a portion of the homes value can have a huge effect on a retiree’s living standards and life.
The benefits of a reverse mortgage will vary from one client to the next. However commonly the money they receive is used to pay off exhorbitant credit card debts, medical expenses, family loans (the reality is that many adult children rely on retired parents for financial assistance) personal loans and repair / maintenance bills for the family home.
On a positive note many other clients utilize the funds to visit family and friends overseas, buy a new car or caravan and have that extended trip around Australia. Did you know that at any one time there are approx. 80.000 “Grey Nomads” traveling the countryside actually enjoying their retirement years. They have to finance that lifestyle somehow and if you don’t have a huge super fund or a passive income from a portfolio of assets built up over time, then a reverse mortgage is a sensible and practical way to fund your dreams.
How do reverse mortgages work?
With a reverse mortgage you borrow an amount (predetermined and subject to conditions) against the value of the home. You do not need to make any repayments and the interest is applied (added) to your loan. The loan is repaid when the borrower(s) either pass on, when all parties move into fulltime care, or when you decide it's time to sell the property. Importantly you do not hand over title of the property (sell) and you retain ownership of the home.
Do reverse mortgages have safeguards?
Yes. Reverse mortgages only allow you to borrow a proportion of your properties value and this varies according to the borrower's age. The strict lending criteria will safeguard against accumulating a large debt and regardless of how long you live the debt will never exceed the properties value, which is often a concern of potential borrowers.
Our consultants are trained to ensure customers are making informed decisions. As further protection, all reverse mortgage customers are required to receive independent legal advice before signing up.
For more information or to make an appointment to meet with an RFS consultant,
Call Now at 1300 88 42 99 |
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