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60 & Over Reverse Mortgage

As we reach the age of 60 and consider part time or full time retirement, we often find that much of our wealth is tied up in the family home. To access the equity or stored wealth in the home we could sell and downsize but this often has little appeal. There is also significant cost including selling agent fees on the house you sell and stamp duty on the new purchase, as well as lower capital gains on the less expensive home purchased. We may not want to sell our home just to access adequate funds to live our life in retirement, and we may be perfectly happy to stay where we are. In this case, a Reverse Mortgage is a way to access some of the equity tied up in the home without leaving, and without selling.

A Reverse Mortgage is just like any other mortgage. It is a loan taken against a residential property but with one important difference. No repayments are required, and the interest repayments that would normally be paid, are added to the loan or capitalised. With the right product, the home ownership does not change in any way. The Reverse Mortgage only becomes repayable when the property is sold, or when the last owner moves into long-term care or passes away. The lender will take out a first mortgage, and no additional mortgages will be allowed on the security. If there is an existing mortgage on the property it will be repaid on settlement of the Reverse Mortgage.

If you are aged 60 and over and own your own home, you may be able to apply for a Reverse Mortgage. The maximum borrowing capacity is calculated by taking the age of the youngest borrower minus 45, and taking this number as the percentage allowed of the value of the home. For example, if the youngest borrower is 60 years old, it is possible to borrow 15% of the value of the property. If 65, then 20% of the value; and if 90 years old, 45% of the value of the property can be borrowed. If the security property is an Investment Property or Holiday Home, the maximum amount available is reduced by 10%.

A reverse Mortgage can be taken as a Lump Sum, as Regular Advances or set aside as a cash reserve and taken as needed on request. You only pay interest on amounts which have been drawn.

A Reverse Mortgage can be used for anything you choose, e.g. home repairs or improvements, travel, medical expenses, a new car, help children buy a home, or whatever else makes retirement life better.

Note: There is a product available where a lender buys a percentage of the property and the owner does not retain full ownership. This product is not a reverse mortgage and not recommended.

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