REASONS FOR ARRANGING A REVERSE MORTGAGE LOAN

There are consistent reasons why over 60s are arranging reverse mortgage loans:

• seniors do not want to be forced to sell and relocate if there is a practical alternative

• “ageing in place” is preferred to forced relocation

• substantial direct and immediate expense of selling and relocation

• forced sale of the family home usually involves emotional trauma and loss of friendships

• average age of applicants is 72 and many seniors have used up their superannuation funds

• cost of living has escalated dramatically and is not covered by pensions and dwindling superannuation funds

• essential home renovations need to be completed but cannot be funded

• escalating interest rates on existing mortgage debt (after retirement) make ongoing loan repayments very difficult

• basic wishes cannot be funded: new vehicle / travel / medical procedures / just having a “Cash Reserve” fund

Reverse mortgage loans can provide a simple, flexible and effective solution to the above difficulties.

Case Study: Elimination of Compulsory Repayments

• retired customers with $150,000 mortgage loan balance

• compulsory monthly repayments have nearly doubled over 12 months / stress of arrears letters being received

• reverse mortgage loan can clear existing debt, eliminate existing repayments and provide a cost-of-living Cash Reserve buffer as well / approved amount $300,000

• voluntary interest payments can then be made / no interest is charged on funds held in Cash Reserve

Case Study: Cash Reserve Fund for Future Needs

• retired customer has small remaining amount in super / owns home outright / home repairs needed

• receives pension, but this is inadequate to fund repairs and cost of living over next ten years

• approved amount $200,000:  $50,000 for immediate needs and $150,000 Cash Reserve fund

Case Study: Aged Care Reverse Mortgage / Power of Attorney

• customer aged 82 needs accommodation in accredited aged care facility / entry cost $500,000

• owns residence worth $1.5m / family wishes to retain property rather than sell it

• at age 82, customer is eligible to borrow 42% of property value or up to $630,000

• son and daughter both act under certified Power of Attorney agreement

• approved amount $600,000: $500,000 for access to facility and $100,000 Cash Reserve for future needs

​