Reverse Mortgages

A reverse mortgage allows you to borrow against the equity in your property to secure extra finances during retirement. It is available to residential property owners who are retired and meet the age criteria of the lender.

Uses of reverse mortgages

You can use a reverse mortgage for most purposes. Some of the most common reasons for using a reverse mortgage are listed below:

  • Holidays
  • Medical expenses
  • Home Renovations
  • Renovations
  • Home maintenance
  • Investments
  • New car or motor home to go travelling
  • Unexpected emergencies

Find Out More About Your Reverse Mortgage Options

Subscribe to our newsletter

Your privacy is important to us! We will never sell or spam your email address.

How do reverse mortgages work?

Recent studies show that more than 50 per cent of borrowers who take out a reverse mortgage use the services of a good mortgage broker or financial planner (Deloitte survey, 2009). This is predominantly due to the tailored reverse mortgage solutions a mortgage broker can provide, as opposed to an ‘off-the-shelf’ option available direct from a lender.

Unlike a regular equity home loan, a reverse mortgage does not generally require regular repayments. The loan is repaid either when the borrower sells their home, moves into a retirement home, or passes away. They are usually secured by a mortgage on your principal place of residence, but you may potentially be able use your residential investment property as security.

You may have the choice of receiving the money made available through a reverse mortgage either as a lump sum or regular income stream, or in some cases a combination of the two.

This type of mortgage can have far-reaching effects so it’s also very important to speak to an accountant or financial planner and a solicitor before entering into a reverse mortgage agreement. It is also a good idea to inform your family.

It’s also very important to ensure your reverse mortgage is covered by a No Negative Equity guarantee that is, the amount you owe on your reverse mortgage will never exceed the value of the property. All reputable lenders will offer this guarantee.

Borrowing capacity for reverse mortgages

Different lenders have different age entry levels for their reverse mortgage products, and the percentage of equity or amount of money you can leverage depends upon your age, usually 15-40 per cent of the value of your property. In the case of two borrowers applying jointly for a reverse mortgage, the percentages are usually worked out using the age of the youngest borrower.

Your complete reverse mortgage assessment

For an assessment on your eligibility for a reverse mortgage and to find the one that suits your retirement plans, talk to your local Loan Market mortgage broker today on 13 5626 (13 LOAN).