Best Reverse Mortgages
Home ownership gives retirees the security of a roof over their head but the downside is having significant wealth tied up in the family home – it’s money that could be used to see seniors through their later years.
Downsizing to a smaller place may seem like a simple solution to the asset rich/cash poor dilemma but it’s not always the quick fix it appears to be.
Research by National Seniors Australia finds many seniors regard the process of downsizing as confusing and costly and involving too much personal and financial upheaval.
That’s when a reverse mortgage can offer a relatively lowstress means of tapping into home equity to free up money for living, instead of moving out. As the name suggests, a reverse mortgage works like a regular home loan but in reverse. Instead of making payments to the bank, the home owner receives regular payments (or a lump sum if preferred) from the lender. The loan is secured by your home and no repayments are necessary until you sell the property or pass away. It may mean leaving a smaller estate to loved ones but the upside is having the funds to enjoy a better lifestyle in retirement.
Heartland Seniors Finance,
which also won this award last year, offers reverse mortgages to homeowners aged 60 and over. A range of drawdown options is available including a lump sum (minimum of $10,000) followed by a series of regular advances.
Alternatively, Heartland customers can skip a lump sum and rely on a regular advance to supplement their income with funds paid annually, quarterly or monthly. The minimum advance is $500 a month, $625 a quarter or $2500 a year.
Heartland also lets seniors set up a reverse mortgage cash reserve that sets funds aside for future needs. Interest is only paid on amounts drawn down, with a minimum drawing of $2500.
The total amount you can borrow through Heartland ranges from 15% of your home’s value if you’re aged 60 through to 45% if you’re aged 90-plus. The secured property can also be a holiday home or investment property, though the maximum borrowing is reduced by 10%.
Bankwest’s Seniors Equity Release Loan
is available to borrowers aged 65-plus. The maximum borrowing is 25% of your home’s value up to a limit of $250,000.
CBA’s Equity Unlock Loan
is available if you’re aged 65 or over, and the maximum borrowing is 40% of your property’s value to a limit of $425,000 depending on your age.