Property Insider
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Reverse mortgages Based on statistics from Heartland Group, Australia’s biggest lender of reverse mortgages, the average reverse mortgage begins at approximately $60,000 and grows to $120,000 over its 7-year lifespan, with an average loan-to-valuation ratio (LVR) of 25 per cent. Heartland Group’s Andrew Ford says the biggest challenge is to increase the awareness and understanding of the product. August 2018 saw the Australian Securities and Investments Commission (ASIC) raise concerns about the reverse mortgage sector releasing a review calling for lenders to improve their approach to meeting responsible lending
obligations and to improve their performance in helping consumers understand theories they take on when they use a reverse mortgage. ASIC found there was poor consumer awareness of the risk of erosion in home equity over time. This erosion in equity could result in the borrower’s inability to afford important future expenses such as aged care and ongoing medical expenses. According to Heartland a typical borrower had run down their super and other assets; they decide to take a reverse mortgage to release funds for things such as renovations, travel, medical expenses, debt
consolidation, or helping the support the next generation. Stress test scenarios such as the borrower has a loan on LVR of 25 per cent, then the house value falling 10 per cent and then resumed growing by two per cent per annum would see a 69-year-old borrower going into negative equity territory after 29 years, aged 98. In another more severe scenario, the house value falls 35 per cent and over the term of the loan, which is on an LVR or 25 per cent; there is no recovery in value, the 69-year-old borrower would enter negative territory after 13 years, at age 82. Borrowers can choose to draw a lump sum, have funds
set aside for future needs via a line of credit, or receive a regular income. Just over half (51 per cent) of loans are to joint borrowers, 34 per cent are to sole females, and 15 per cent
are to sole males. This article is based on an article by John Kavanagh. The original article can be read on shedconnect.com.
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byronshirerealestate.com.au
36 Pine Avenue, Mullumbimby
5/1 Bindaree Way, Ocean Shores Great unit in a convenient location just a 2-minute walk to the shops. Ideal for the first home buyer or investor, this 2-level apartment has an attached garage and a private outdoor entertaining area with rear access. Don’t miss this one.
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Inspect Saturday 12th Jan 10-10.30am Price $680,000 Todd Buckland 0408 966 421
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The property is waiting for a magic touch. Well positioned on a flat corner block with two street accesses and fenced yard, you’ll find this retro home is practical and affordable. Located opposite the local soccer field within a comfortable stroll of town. Great value.
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Inspect Saturday 12th Jan 1-1.30pm Price $459,000 Todd Buckland 0408 966 421
119 Balemo Drive, Ocean Shores Council approved dual occupancy. The existing 2 storey home is a great starting point with heaps of room for a family. Great low risk project for someone wanting to get into property development with all the guess work taken care of.
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Inspect Saturday 12th Jan 1-1.30pm Price $750,000 Todd Buckland 0408 966 421
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