Reverse Mortgage
Reverse mortgages also know as lifetime loans have been available in Australian since the early 1990’s, designed to allow ”house rich, cash poor” elderly homeowners to access their home equity to pay living expenses or emergency bills without having to sell their homes. To find out more contact us TODAY. The greatest benefit of a reverse mortgage is the ability to access lump sums or regular payments without ever needing to make a repayment to the loan. The amount of money drawn from home equity is paid back from the settlement proceeds on the eventual sale of the home.
The biggest concern for borrowers are the uncertainty of interest rates and the capital growth of the property market. Unlike a traditional mortgage, interest incurred on the borrowed funds are capitalized or added to the original borrowings. Overtime as the amount draw increases so does the interest costs incurred. This is all well an good in a low interest rate environment and steady property growth. Things change when the property market stagnates and interest rates begin to rise. ASIC’s Reverse Mortgage Calculator
It is always wise to investigate all your possible options. The answers will depend on your age, property type and value, the amount of money you require, weather you require a lump sum or regular payments and your risk appetite. We are the experts in Equity Release strategies and the pioneers of the SURE property option. Contact us today to map out the advantages and disadvantages of all your options.
In the 1990’s, the Advance Bank offered the first reverse mortgage products, although they were withdrawn due to a lack of consumer demand.
Retirement Demographics have changed considerably over the last 20+ years. Today, not only do retirees face a longer retirement, but they are also experiencing spiraling costs of living and poor investment returns with interest rates at almost historical lows.
St George Bank took over Advance bank in 1998 it inherited their reverse mortgage product and this has since developed into the Senior’s Access Home Loan they continue to offer today.
Around 2001 the Commonwealth Bank entered the reverse mortgage market with the release of what is now known as ‘Equity Unlock For Seniors’ which is a product that still being offered in existence today. The Commonwealth Bank has interests across a number of brands in the reverse mortgage space and currently provides funding for both the Bankwest and Australian Seniors Finance Products.
By 2006 there were more than twenty banks, credit unions and non-bank lenders offering reverse mortgages. The Global Financial Crisis in 2008 saw many lenders exit the reverse mortgage market due to the scarcity availability of funds and volatility of the property market.
Since 2014 we have seen lenders re-launch products in anticipation of the retirement funding shortfall projected for the coming generation of retiring baby boomers. Of the previous 20+ lenders, Commonwealth Bank, St George, Macquarie, Bankwest, and Australian Senior’s Finance (ASF) are currently the most active with rumours of more re-emerging into the market.
With the introduction of both the NCCP act and SEQUAL industry body we have seen Enhanced Regulation of the reverse mortgage industry to protect the interest of senior Australians.
In 2004 the early product providers established ‘The Senior Australians Equity Release Association of Lenders’ (SEQUAL), as an industry body to represent their interests. SEQUAL established a code of conduct and an infrastructure of self-regulation which was very effective in protecting sometimes vulnerable pensioners and elderly borrowers.
In 2011, the Federal Government under then minister Bill Shorten, officially regulated reverse mortgages as part of the ‘second phase’ of the National Consumer Credit Protection (NCCP) code. This law improved disclosure requirements by lenders and brokers, and enshrined in legislation key components of SEQUAL code of conduct such as the ‘No Negative Equity Guarantee.’
Reverse mortgage options now exist for homeowners from 60 years of age and options are now emerging for long term aged care requirements such as the accommodation bond. Don’t wait until you are under pressure to make hasty decisions. Specialist Advice regarding Equity Release Strategies is critical. Contact us today to discuss.
