Nearing the retirement or post retirement period, the lack of cash in hand is a common problem for many seniors. There are instances, when the liquid assets is an absolute necessity in matters of home renovations expenses, lifestyle plans, holiday trip or even for enhancing investments for a relaxed retired life. The reverse mortgage is a dynamic option you can take advantage of to meet the financial crunches to lead the desired lifestyle with complete peace of mind.
Before finding more on the best seniors reverse mortgage lenders Australia, here are things to know on how the reverse home loans can be just the ideal option to meet your financial needs.
What is Reverse Mortgage?
The reverse mortgage is the term used to describe the equity release product (ERP) or home loans, a kind of credit product in Australia. An alternative to convert your equity asset into quick cash, these loans are available against properties including homes, investment properties and holiday homes within the residential zoning.
Is there any age limit to qualify for reverse mortgage loans?
To qualify for the reverse mortgage, the applicant with the residential property must be aged 60 years or above.
Key Advantages of Reverse Mortgages
1. Flexibility to Choose How You Want to Get the Loan Amount
Depending on your requirement, you can take the loan amount on reverse mortgage in any form or a combination of the options below:
- The entire amount at once
- In credit line
- As a regular source of income
- Share of the amount at once followed by regular income
2. Flexible Repayment Options
Depending on your decision as per convenience, you may choose to repay the loan amount in any of the following ways:
- Repay the loan amount at the time of selling your home
- At the time when borrower plans to move into aged care
- Upon the death of the surviving borrower
3. Reliable Source of Post Retirement Income without Selling Your Home
When in need of regular source of income after retirement, the reverse mortgage gives you the necessary funds as and when needed without selling your property.
4. Negative Equity Protection
As per the recent industry regulations, the borrowers do not have to pay anything in excess above the value of the house at the time of sale. This means, the lender does not get anything above the selling amount of the house protecting the borrower’s family for prevailing debts.
5. Use the Loan Amount for any Purpose
Once you have the funds, it is up to you to decide on how to spend it- medical treatment, foreign trips, improve lifestyle, remodeling your home etc.
Downsides of Reverse Mortgages
1. Comparatively Higher Interest Rates
The interest rates charged on the reverse mortgages are a bit higher than standard home loans generally set around 6.25%-7.25% (varies from one lender to another) at the time of writing. However, with passing time the compounded interest can increase the pressure of repayment amount.
2. Interference with the Pension Eligibility
Depending on the reverse mortgage, funds you have can reduce your pension benefits. You may approach the Department of Human Services in advance to get the full information to restructure your loan amount.
Top 3 Reverse Mortgage Plans
1. Commonwealth Bank Equity Unlock for Seniors
Commonwealth Bank offers the reverse mortgage plan at the residential equity rate of 6.37% p.a. and the comparison rate of 6.40%p.a.
2. Bankwest Seniors Equity Release Home Loan
This is one of the most popular and among the best seniors reverse mortgage lenders Australia offered at $0 ongoing fees. Seniors above the age of 65 years can borrow 25% of the value of the home up to $250,000 loan amount.
3. P&N Bank Easy Living Home Loan
Available to the seniors over 65 years of age, this reverse mortgage product is suitable for the homeowners looking for any loan size varying from $10,000 to 35% of the property value.
You can choose from above or any other Seniors Reverse Mortgage Lenders as per your need.