January 31, 2016
Reverse Mortgages are best suited to borrowers who seek to convert the equity in their homes into cash. This style of loan allows the cash-poor, asset-rich to tap into the value of their property without having to sell it.
Reverse Mortgages are available to Borrowers of 65 years of age and above. As a rule of thumb, these Borrowers can borrow up to approx. 25% of the value of their principal place of residence. The reverse mortgage is payable when the house is sold or the last borrower moves into aged care.
It is a given that clients seek independent legal and financial advice prior to applying for a reverse mortgage. Better choice also recommends that clients discuss a reverse mortgage with all family members prior to applying for a reverse mortgage. Please avail yourself of the ASIC calculators here.
With any loan there is of course interest to pay, however a reverse mortgage requires no monthly payments. Instead, the loan is paid back with the interest accumulated when the house is sold. In other words, the interest is capitalised which means it’s added to the amount of the loan.
There are a variety of reverse mortgage options and a knowledgeable Better Choice Finance Broker can help ensure that you are maximising the full benefits.
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