Reverse Mortgage – Living with ease in the golden years


Sumar Ambreen

Most Australians aged 65 and over own their own home. A reverse mortgage will allow you to borrow against the equity in your home, without having to sell, by releasing funds for comfortable years ahead in retirement.

If you have already paid off your mortgage, you may benefit from taking a reverse mortgage to access funds to shoulder some retirement expenses such as aged care, home renovation and debt consolidation while continuing to keep full ownership of your home. At the same time, you can continue to accumulate equity as property prices rise and avoid many of the costs associated with downsizing, such as real estate fees, moving costs and stamp duty. The loan can be used as a lump sum, regular income plan or a line of credit, so you have flexible options depending on your circumstances. One of the additional benefits of a reverse mortgage is that you can stay in your home for as long as you choose.

Income, Cash Flow and Pension Top-up

As a senior on limited income, you may be finding it difficult to make ends meet. Most seniors also need to pay medical and prescription bills. Worrying about where to find the money for everyday expenses can be an added burden during retirement. Having the additional monthly income that a reverse mortgage can provide means you can enjoy coffee with friends at your local café or indulge in a dinner outing now and then without worrying if you can make it to your next pension payment.

Home repair and renovations

Reverse Mortgages can also be used for repair and renovation purposes. For example, there may be important health or medical reasons why certain home improvements are needed, which can prove costly when considering changes like wheelchair access. In addition, older homes that have been neglected over time can cause costly issues for home owners and may result in permanent damage to the property which can then reduce the value of the home. Maintenance and repairs can often exceed thousands of dollars that would be otherwise out of reach to those living on a pension.

Debt Consolidation

You may not be aware, but many Australian seniors share a common problem of struggling to meet the monthly repayments for high-interest loans or credit cards. A Reverse Mortgage allows you to consolidate your debt and repay one loan at a lower interest rate.
Refinance existing home loans for retirees
You may still be paying off your home mortgage after retirement. With a reduced income you may find it difficult to maintain a lifestyle that you’re accustomed to as well as continuing your mortgage repayments. A reverse mortgage can be a cost-effective solution to the problem by refinancing your mortgage.

Aged Care

Refundable Accommodation Deposit (RAD) – The Bond, is a large amount of money that many retirees often find difficult to pay. Most people think selling the family home is the only option, which can be a distressing outcome for the family. However, in many cases the house can be retained by using a Reverse Mortgage loan to fund Aged Care entry costs.

Travel & Holidays

Many seniors miss out on the travel they desire because they simply can’t afford it. Those who do manage to get away usually finance trips with their savings, superannuation, personal loans or credit cards with high interest-rates.

Organising a reverse mortgage may help you climb aboard that cruise you’ve always dreamed of, fund a visit to your family interstate or overseas, or finally taking that tour through Europe with friends.

When considering your retirement funding options, it’s also important to consider protecting your assets, so you should also consider:
Safeguarding you, your property and its equity with the appropriate levels of insurance

Updating your estate plan to make sure your affairs are in order in the event of incapacity or death, so you can rest easy knowing your family doesn’t have to worry

If you need a financial strategy to make your hard-earned money last well into your twilight years so you can continue to enjoy your retirement for as long as possible.

By Ambreen Sumar, Lending Specialist

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