A.S.A.G. Reverse Mortgage

A reverse mortgage is a loan designed particularly for senior homeowners who are in or are considering retirement. This type of loan doesn’t require regular repayments. The customer remains the owner of their home and continues to live in it. The total loan amount is repaid from the sale of the property later on, either to downsize or to move into aged care.

Those who are 60 or over and a property owner in Australia are eligible to apply for a reverse mortgage.

A reverse mortgage is one of the most popular types of equity release products in Australia. Equity Release is a term that describes a range of products, with reverse mortgages being one. This also includes home reversion products. Both types enable customers to release some of their home equity, but there are differences.

Reverse mortgages allow senior homeowners to borrow funds against their homes without having to make regular repayments. They retain ownership of the property and stay for as long as they want to live out their retirement. The loan is paid off from the future property sale when the customer decides to downsize or move into aged care.

Home reversion products are not loans, they’re part-sale property transactions. Instead of borrowing against their home’s value, the customer agrees to sell a portion of the house to trade for a lump sum advance. They own and live in the property but won’t deal with capitalised interest on the debt.

Aside from our fees, there are additional costs associated with taking out a reverse mortgage. A.S.A.G. fees are found within our A.S.A.G. Fee Schedule which can be requested for your independent review. Other additional costs to keep in mind during your research include the costs of obtaining:

1. Legal advice — a legal advisor’s sign-off is required by the lender and this can range in amounts depending on your preferred solicitor.
2. Government costs in connection with the lender’s registration of its interest in the property.

As reverse mortgages do not have any required regular repayments, over time, interest compounds as you pay interest on your interest, any fees and charges that are added to the loan. The longer you have the loan, the higher the amount you’ll have to return.

Before taking out an A.S.A.G. Reverse Mortgage, it is important to consider if it’s the right decision for you. If you do not proceed with an A.S.A.G. Reverse Mortgage you will not incur any of the required exit and discharge fees if you decide to change after the loan is active. With an active loan, you can of course change your mind and exit the loan and/or sell your house at any time.

No, you won’t lose your home with a reverse mortgage as you remain the owner of the property until you decide to sell.

A reverse mortgage can be a vital tool in your long-term retirement strategy that can help improve your income and lifestyle when used properly.

A review by ASIC found that reverse mortgages could help retirees to reduce financial stress and fund a more comfortable retirement. There may be higher demand for these products in the future with more releases in the Australian market as the population ages.

Accessing some capital now will reduce the amount of your home equity available for any beneficiaries of your estate. However, a planned approach that also includes professional consultation by a financial advisor and discussions with family will assist you in the planning process to ensure that you have enough for any desired inheritances and aged care at a later time.

Reverse mortgages are government regulated, comply with vulnerable client protection, and subject to stringent lending criteria. All applicants will be assessed if they have sufficient equity in their home, meet lending criteria and are entering into the loan knowledgeable and fully prepared. They must also be able to maintain their property and keep it insured throughout the loan term. Independent legal advice may also be required.

A reverse mortgage isn’t a choice for everyone and there is still the consideration to downsize. There’s likely to be a financial cost to sell a house, with an emotional attachment as most retirees wish to age in place. Selling your home may also have an effect on the amount of pension you’re eligible to receive from then on. In any decision process, it’s important that you consider all options and if applicable to you, contact Centrelink to discuss your future entitlements.

Terms and conditions apply, and you are required to meet your responsibilities under the contract.