26 YOUR RETIREMENT LIVING
initial lump sum taken. Additional amounts can be drawn down as needed from the cash reserve. Alternatively, a regular payment facility can be arranged for monthly or quarterly advances over five or 10 years. No repayments are required and the interest due each month is added to the loan balance, however any amount can be paid towards the loan at any time with no penalty. The loan only becomes repayable when the last applicant passes away, moves into permanent long-term care or when the property is sold.
The key attributes of a reverse mortgage loan are: • Flexibility: Take your loan as a lump sum, cash reserve facility, regular advance, or a combination. Repayments are not required but are able to be made partially or in full, at any time without penalty. • Freedom of purpose: Use the funds for any worthwhile purpose including home improvements which can add value to the home. Go do that bucket list while there is still time. • Peace of mind: Having access to the equity in your home without having to move. • Ownership retained: You benefit 100 percent from any increases in property values and the loan can be paid back easily at any time if able. • Lifetime occupancy: You choose when to leave.
Reverse mortgages are guaranteed never to exceed the value of the home no matter what happens in the housing market. As well, a percentage of the home value can be protected with the equity protection feature. Any worthwhile purpose is acceptable such as home improvements, motor vehicle, caravan, in home care, debt consolidation, day to day living expenses, or to travel and live your dreams. When applying for a seniors loan it is recommended that applicants discuss their intentions with their family and check with Centrelink to ensure benefits are not affected. Any Centrelink issues are usually overcome by restructuring the reverse mortgage. Legal advice is required when signing the loan documentation. Professionals like The Seniors Loan Specialist will guide you with specific product information and how it applies to you, as well as make sure you understand the loan fully.
One word of warning: the home reversion scheme is an equity release scheme where a lender purchases a percentage of your property for an amount which is usually less than market value, is not a reverse mortgage. It is not a loan, and it is not straightforward to regain full ownership of the property. In this equity release scheme, the ‘lender’ becomes a part owner on the Title of your home. Make sure you are not selling part of your home. Of interest to some will be the aged care loan which is a special kind of reverse mortgage for aged care accommodation expenses. The home is retained for the spouse, capital gains and estate planning, and can be rented out if desired. This article has focused on the over 60s, however, anyone over 50 years old will need special assistance to get a loan even if they are working full time. Loan terms are reduced affecting repayments and serviceability and each lender treats the over 50s differently. Call The Seniors Loan Specialist for your best options. For more information about a reverse mortgage loan, go to www.theseniorsloanspecialist.com.au or call The Seniors Loan Specialist on (02) 9653 2034 or 0414 903 443. Article kindly supplied by Sandra Dignam, The Seniors Loan Specialist.