Reverse your thinking - By Julie Browne

Are you thinking about a reverse mortgage and:

  • You’re over 60 years of age, retired or approaching retirement?
  • Need extra money for a specific reason?
  • See yourself as ‘cash poor’ but ‘asset rich’ because you own your home, or owe very little?
  • Want to avoid selling your home?

And did you know that:

  • The reverse mortgage market is growing by 10% per annum ( 2012 Deloitte report) 
  • $83,000 is the average loan size 
  • Home improvements, debt repayments, regular income is the most popular usage 
  • An average borrower is 74 years old
  • Providers of a reverse mortgage, who are members of the Senior Australian Equity Release Association (SEQUAL), must offer a No Negative Equity Guarantee (NNEG) product so you don’t end up owing more than what your home is worth   


So what is a reverse mortgage?

It’s a loan generally only available if you are aged over 60. You don’t make repayments on the money you borrow while you live in your home. The loan must be repaid if you sell your home or the last remaining borrower passes away.  

 

How do I know how much money I can get?

You can usually get around 15-40% of the net value of your home (the difference between what it’s worth and any loan you have already). The percentage amount increases as your age increases.  

 

How much debt will be accumulated?

The amount of money you owe will increase over time. Fees and interest are added to the loan and the interest will compound. This means you pay interest on the interest, plus interest on any fees or charges added to the loan balance.  

 

Will there be any money left over?

There is no way of knowing how much money will be available in the end. Some products allow you to protect a fixed value of your home, guaranteeing there will be some money left if you sold.  

 

Can I end of owing more than the value of my home?

Yes, the amount owing could be more than what your home is worth. To protect against this, look for a product with a no negative equity guarantee

 

Who can help me?

The growth of the industry has brought about the inception of SEQUAL to ensure professionalism of those who offer reverse mortgage products to you. Julie Browne is your local mortgage broker in Adelaide CBD & Prospect with SEQUAL accreditation.

 

When you deal with Julie Browne she will ensure:

  • That your reverse mortgage loan contains the ‘no negative equity’ guarantee. In other words you will never owe more than the net value of your property, provided the terms and conditions of your loan are met
  • You are strongly encouraged to discuss the transaction with family members and seek independent financial and legal advise
  • You are strongly encouraged to discuss the transaction with Centrelink to ensure you understand any impact on Centrelink entitlements
  • You have been presented with key information covering the benefits and obligations of using a reverse mortgage product
  • You have been provided with the calculation tool illustrating the potential effect of future house values, interest rates and compounding interest

 

Are you still in reverse mode?  

 

If you have read this far you definitely are, so call Julie Browne today on 0421 206 543 to get started 

Posted in: Home loans

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