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ISCOVER
Staff Reporter
Reverse mortgages are back en vogue, with an increasing number of Australians taking up the product to help fund their retirement activities.
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According to new research by Deloitte, the number of people taking out reverse mortgages has increased by 22 per cent over the past two years.
Loan Market Sydney-based principal finance broker and reverse mortgage consultant Bob Staley said more than 40,000 Australians currently hold reverse mortgages, which are also known as Seniors Finance Equity Release loans.
“It is becoming more popular in the post global financial crisis environment,” Mr Staley said.
Reverse mortgages are available to people aged 63 and over and are designed specifically to allow seniors to use the equity in their home or investment property to release cash for their own use.
“This is a lifetime loan with no repayments required until the property is sold,” Mr Staley said.
“Unlike the traditional mortgage, there are no criteria to obtain a reverse mortgage such as income criteria. It can be used for any purpose such as an overseas holiday, to buy a car, to invest, home improvements, health reasons or repayment of a current mortgage.”
Mr Staley said the maximum amount available to borrow under a reverse mortgage was $425,000. The interest rate is slightly higher than the standard variable interest rate.
“There are a range of lenders who offer reverse mortgages, and each lender will make various percentages of equity available depending on your age and the age of your partner,” he said.
