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| Reverse Mortgages - Reverse
Mortgage Loans Australia
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Reverse mortgages can allow you to
free up money to maintain or increase your
standard of living. You don't have to make
repayments, but the longer you have the loan the
more the debt will grow. You can use the money,
for example, to buy a new car, go on a holiday or
make urgent repairs to your house. Reverse
mortgages allow you to keep your financial
independence without the need to sell your house
and relocate to a smaller residence. |
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| How Reverse Mortgages
work
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They work in the opposite way to a
home loan. Instead of the loan sum diminishing
because of your repayments, interest is applied to
your reverse mortgage loan so the debt increases.
You're not required to make any repayments but the
impact of fees and interest means the debt grows
over time. At current interest rates, the amount
you owe would double in less than 10 years.
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| Joint owners
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The lender allows you to stay in your
house until you sell it, move out or die. If you
live with a partner or spouse and they're joint
owners of the house, the reverse mortgage would be
in both names so your home is protected as long as
one of you lives there. If only one of you owns
the house be warned: the loan will only be in one
name so it will have to be repaid when the partner
who owns the house dies or moves into residential
aged care. |
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| Disadvantages of
reverse mortgages
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The main disadvantages of reverse mortgages are
they can limit your options in the future:
- you may not have enough money left to fund
moving into a retirement village
- the value of your estate may be much less
than anticipated because the debt increases over
time
- if you take the loan as a lump sum it may
have an impact on your eligibility for
Centrelink payments.
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