Reverse Mortgages

Often known as a ‘Senior’s Mortgage’, ‘Senior’s Loan’ or ‘Reverse Home Loan’, a Reverse Mortgage is a loan for people over the age of 65, who have equity in their home and need to tap into it because they either need a lump sum or regular ‘pension-like’ payments coming in.

A Reverse Mortgage is not akin to a typical ‘mortgage’ as you know it to be, where you borrow money and make repayments to pay the loan back over a certain number of years. No. This is quite different.

With a Reverse Mortgage, if you are of retirement age, you can borrow against the equity in your home and receive the monies either as a lump sum, a regular income stream, a line of credit or a combination of the three and yet you are NOT required to make any repayments. Voluntary repayments can be made at any time, if you wish to make them, but are not a requirement.

There is no income requirement to the lender, neither is there any need to explain why you want the funds. You may have decided to go on that dream overseas trip that life has kept you too busy to contemplate until now. Maybe you want to help your son or daughter in realising their dream of owning property. Perhaps you just want an extra dollar or two in your pocket each week. Now you have the time to take up that hobby you’ve always been too busy to try, or you’d like to join in more social circles – movies, coffee, travel, Friday-night dinners with the gang….. This is often the answer for retirees, enabling them to continue living the lifestyle they have grown accustomed to. Imagine being able to stay in your own home on the Gold Coast with its laid-back lifestyle, instead of having to sell and relocate.

Reverse Mortgages

Often known as a ‘Senior’s Mortgage’, ‘Senior’s Loan’ or ‘Reverse Home Loan’, a Reverse Mortgage is a loan for people over the age of 65, who have equity in their home and need to tap into it because they either need a lump sum or regular ‘pension-like’ payments coming in.

A Reverse Mortgage is not akin to a typical ‘mortgage’ as you know it to be, where you borrow money and make repayments to pay the loan back over a certain number of years. No. This is quite different.

With a Reverse Mortgage, if you are of retirement age, you can borrow against the equity in your home and receive the monies either as a lump sum, a regular income stream, a line of credit or a combination of the three and yet you are NOT required to make any repayments. Voluntary repayments can be made at any time, if you wish to make them, but are not a requirement.

There is no income requirement to the lender, neither is there any need to explain why you want the funds. You may have decided to go on that dream overseas trip that life has kept you too busy to contemplate until now. Maybe you want to help your son or daughter in realising their dream of owning property. Perhaps you just want an extra dollar or two in your pocket each week. Now you have the time to take up that hobby you’ve always been too busy to try, or you’d like to join in more social circles – movies, coffee, travel, Friday-night dinners with the gang….. This is often the answer for retirees, enabling them to continue living the lifestyle they have grown accustomed to. Imagine being able to stay in your own home on the Gold Coast with its laid-back lifestyle, instead of having to sell and relocate.

Reverse Mortgages

Often known as a ‘Senior’s Mortgage’, ‘Senior’s Loan’ or ‘Reverse Home Loan’, a Reverse Mortgage is a loan for people over the age of 65, who have equity in their home and need to tap into it because they either need a lump sum or regular ‘pension-like’ payments coming in.

A Reverse Mortgage is not akin to a typical ‘mortgage’ as you know it to be, where you borrow money and make repayments to pay the loan back over a certain number of years. No. This is quite different.

With a Reverse Mortgage, if you are of retirement age, you can borrow against the equity in your home and receive the monies either as a lump sum, a regular income stream, a line of credit or a combination of the three and yet you are NOT required to make any repayments. Voluntary repayments can be made at any time, if you wish to make them, but are not a requirement.

There is no income requirement to the lender, neither is there any need to explain why you want the funds. You may have decided to go on that dream overseas trip that life has kept you too busy to contemplate until now. Maybe you want to help your son or daughter in realising their dream of owning property. Perhaps you just want an extra dollar or two in your pocket each week. Now you have the time to take up that hobby you’ve always been too busy to try, or you’d like to join in more social circles – movies, coffee, travel, Friday-night dinners with the gang….. This is often the answer for retirees, enabling them to continue living the lifestyle they have grown accustomed to. Imagine being able to stay in your own home on the Gold Coast with its laid-back lifestyle, instead of having to sell and relocate.

So How Does This Work?

Just like any mortgage, the loan is secured against your unencumbered owner-occupied property. The amount you can borrow will be determined by your age and the value of your property. There are limits as to what percentage will be available for you to borrow, depending on the lender and their policy in this regard, however, generally, you can borrow between 15% and 40% with the percentage increasing with age. For example, a 65 yr old could borrow 15% and this will increase up to say an 80 yr old borrowing 35-40%.

Interest will be charged to the loan and current rates are sitting at around the 6.2% to 6.4% mark. What is unique about this type of loan is that the interest charged is added to the loan amount and ‘capitalised’, so the amount owing will continue to increase over time.

How is the Loan Repaid without Repayments You Ask?

There are 3 circumstances that will see the loan repaid: –

You sell your home and repay the loan OR

You move into aged care OR

The last of the borrowers passes away

Tell Me More About the Interest Charged – This Could Add Up to Quite a Sum Owing Right?

The short answer is – yes it could – but it is not as scary as you may think! In September 2012, the Australian Government introduced a compulsory ‘Negative Equity Protection’ to be included in all new Reverse Mortgage contracts. Essentially, what this means is that you cannot end up owing the lender more than your home is worth. So, when the time comes time to, say, move into aged care and your property is sold, if your mortgage is sitting at $526,000 owing and yet the value of your property is $475,000 and sold for this amount, the loan would be considered paid in full, even though it looks to fall short by $51,000. It also means that if the values were in reverse order, loan owing was $475,000 and the home sold for $526,000, the loan is paid off and you retain the surplus of $51,000.

What are the Costs Involved?

As with any mortgage, there will be costs involved and of course, every lender is different. You can expect to pay either an application fee or establishment fee, a settlement fee, a valuation fee and possibly monthly administration fees. Please check with your hfinance Mortgage Broker.

Are There Any Other Issues I Should Know About?

Or course. As with any mortgage, there are some circumstances you should be aware of when making the decision to go ahead with a Reverse Mortgage: –

  • The interest rate lenders are offering for this type of loan are much higher than a standard variable rate
  • A Reverse Mortgage could affect your eligibility for the aged pension
  • If you are the sole owner of the property and you have someone else living in your home, that person may not be able to stay living in the property when you pass away
  • You may use up any funds necessary for future care requirements before you reach the need for them

So How Does This Work?

Just like any mortgage, the loan is secured against your unencumbered owner-occupied property. The amount you can borrow will be determined by your age and the value of your property. There are limits as to what percentage will be available for you to borrow, depending on the lender and their policy in this regard, however, generally, you can borrow between 15% and 40% with the percentage increasing with age. For example, a 65 yr old could borrow 15% and this will increase up to say an 80 yr old borrowing 35-40%.

Interest will be charged to the loan and current rates are sitting at around the 6.2% to 6.4% mark. What is unique about this type of loan is that the interest charged is added to the loan amount and ‘capitalised’, so the amount owing will continue to increase over time.

How is the Loan Repaid without Repayments You Ask?

There are 3 circumstances that will see the loan repaid: –

You sell your home and repay the loan OR

You move into aged care OR

The last of the borrowers passes away

Tell Me More About the Interest Charged – This Could Add Up to Quite a Sum Owing Right?

The short answer is – yes it could – but it is not as scary as you may think! In September 2012, the Australian Government introduced a compulsory ‘Negative Equity Protection’ to be included in all new Reverse Mortgage contracts. Essentially, what this means is that you cannot end up owing the lender more than your home is worth. So, when the time comes time to, say, move into aged care and your property is sold, if your mortgage is sitting at $526,000 owing and yet the value of your property is $475,000 and sold for this amount, the loan would be considered paid in full, even though it looks to fall short by $51,000. It also means that if the values were in reverse order, loan owing was $475,000 and the home sold for $526,000, the loan is paid off and you retain the surplus of $51,000.

What are the Costs Involved?

As with any mortgage, there will be costs involved and of course, every lender is different. You can expect to pay either an application fee or establishment fee, a settlement fee, a valuation fee and possibly monthly administration fees. Please check with your hfinance Mortgage Broker.

Are There Any Other Issues I Should Know About?

Or course. As with any mortgage, there are some circumstances you should be aware of when making the decision to go ahead with a Reverse Mortgage: –

  • The interest rate lenders are offering for this type of loan are much higher than a standard variable rate
  • A Reverse Mortgage could affect your eligibility for the aged pension
  • If you are the sole owner of the property and you have someone else living in your home, that person may not be able to stay living in the property when you pass away
  • You may use up any funds necessary for future care requirements before you reach the need for them

So How Does This Work?

Just like any mortgage, the loan is secured against your unencumbered owner-occupied property. The amount you can borrow will be determined by your age and the value of your property. There are limits as to what percentage will be available for you to borrow, depending on the lender and their policy in this regard, however, generally, you can borrow between 15% and 40% with the percentage increasing with age. For example, a 65 yr old could borrow 15% and this will increase up to say an 80 yr old borrowing 35-40%.

Interest will be charged to the loan and current rates are sitting at around the 6.2% to 6.4% mark. What is unique about this type of loan is that the interest charged is added to the loan amount and ‘capitalised’, so the amount owing will continue to increase over time.

How is the Loan Repaid without Repayments You Ask?

There are 3 circumstances that will see the loan repaid: –

You sell your home and repay the loan OR

You move into aged care OR

The last of the borrowers passes away

Tell Me More About the Interest Charged – This Could Add Up to Quite a Sum Owing Right?

The short answer is – yes it could – but it is not as scary as you may think! In September 2012, the Australian Government introduced a compulsory ‘Negative Equity Protection’ to be included in all new Reverse Mortgage contracts. Essentially, what this means is that you cannot end up owing the lender more than your home is worth. So, when the time comes time to, say, move into aged care and your property is sold, if your mortgage is sitting at $526,000 owing and yet the value of your property is $475,000 and sold for this amount, the loan would be considered paid in full, even though it looks to fall short by $51,000. It also means that if the values were in reverse order, loan owing was $475,000 and the home sold for $526,000, the loan is paid off and you retain the surplus of $51,000.

What are the Costs Involved?

As with any mortgage, there will be costs involved and of course, every lender is different. You can expect to pay either an application fee or establishment fee, a settlement fee, a valuation fee and possibly monthly administration fees. Please check with your hfinance Mortgage Broker.

Are There Any Other Issues I Should Know About?

Or course. As with any mortgage, there are some circumstances you should be aware of when making the decision to go ahead with a Reverse Mortgage: –

  • The interest rate lenders are offering for this type of loan are much higher than a standard variable rate
  • A Reverse Mortgage could affect your eligibility for the aged pension
  • If you are the sole owner of the property and you have someone else living in your home, that person may not be able to stay living in the property when you pass away
  • You may use up any funds necessary for future care requirements before you reach the need for them

How Can hfinance Help?

If you have read through to this point and are thinking ‘Yes, this is me’, then please give your local hfinance Mortgage Broker a call today and we can have a chat about what a Reverse Mortgage could mean for you and how we can make it happen.

Kirstie Penton is your local Gold Coast Mortgage Broker, and I’m waiting to hear from you today. Living in the Gold Coast region, I understand the local trends and financing issues. Click here to book your free coffee and consultation with me, or you can call me on 1300 928 227 or email me at info@hfinance.com.au. To talk with a Melbourne Mortgage Broker Click Here, to talk with a Preston Mortgage Broker Click Here or to talk with a New York Mortgage Broker Click Here.



    How Can hfinance Help?

    If you have read through to this point and are thinking ‘Yes, this is me’, then please give your local hfinance Mortgage Broker a call today and we can have a chat about what a Reverse Mortgage could mean for you and how we can make it happen.

    Kirstie Penton is your local Gold Coast Mortgage Broker, and I’m waiting to hear from you today. Living in the Gold Coast region, I understand the local trends and financing issues. Click here to book your free coffee and consultation with me, or you can call me on 1300 928 227 or email me at info@hfinance.com.au. To talk with a Melbourne Mortgage Broker Click Here, to talk with a Preston Mortgage Broker Click Here or to talk with a New York Mortgage Broker Click Here.



      How Can hfinance Help?

      If you have read through to this point and are thinking ‘Yes, this is me’, then please give your local hfinance Mortgage Broker a call today and we can have a chat about what a Reverse Mortgage could mean for you and how we can make it happen.

      Kirstie Penton is your local Gold Coast Mortgage Broker, and I’m waiting to hear from you today. Living in the Gold Coast region, I understand the local trends and financing issues. Click here to book your free coffee and consultation with me, or you can call me on 1300 928 227 or email me at info@hfinance.com.au. To talk with a Melbourne Mortgage Broker Click Here, to talk with a Preston Mortgage Broker Click Here or to talk with a New York Mortgage Broker Click Here.