Reverse Mortgages
Unlock the equity in your home with confidence!
Are you a homeowner looking for financial flexibility and security in retirement? If you are over 60, a reverse mortgage could be the unique financial solution you have been looking for. With no need for repayments, it may give you the additional money you need to be comfortable in retirement and allow you to stay in your home for longer.
What is a reverse mortgage?
Similar to a typical home loan, a reverse mortgage allows you to borrow against the equity in your home but unlike a regular loan, you are not required to make repayments.
The basic premise of a reverse mortgage is relatively straight forward. Instead of making a payment to the lender, as with a traditional mortgage, the lender makes payments to the homeowner. The amount you can borrow is based on your age, the interest rate and the value of your home.
Payments can be taken as a lump sum, line of credit or as a monthly payment.
As you are not making regular repayments, the interest on the loan compounds and continue to grow, adding to the amount you originally borrowed and overtime reducing the equity in your home.
You will still own your home and can stay as long as you wish. When you decide to move, sell or you pass away, the loan is repaid to the reverse mortgage provider in full, including interest and fees.
It's important to note that the interest rate on a reverse mortgage is likely higher than a standard home loan and if variable interest rates rise, the interest you pay each month will also increase.
To read more about a reverse mortgage, check out our blog A Quick Overview of the Reverse Mortgage Application Process
What are the advantages of a reverse mortgage?
Having ready access to your equity means not having to compromise on things you really need or worry about those unexpected emergencies. A reverse mortgage can give you the financial security to:
Eliminate Monthly Mortgage Repayments
If you still have a mortgage on your home when you retire, continuing making mortgage payments can be a drain on your income. Rolling over the remaining debt to a reverse mortgage can remove these payments and give you the extra income you need in retirement.
Make Home Improvements
Need a new roof, new bathroom or other necessary home repairs? Finding the money for expensive repairs can be tough when you are on a pension. A reverse mortgage is a way to make these repairs and continue to live comfortably in your own home.
Supplement Your Retirement Income
You don't have to take the funds from a reverse mortgage in a lump sum. You can opt for a monthly payment to supplement your retirement income. That way, you are not paying compounding interest on a lump sum withdrawal but more importantly, you have the extra income you need for a comfortable retirement.
Stay In Your Home for Life
You will still own your home and you can stay in it for as long as you wish. The loan doesn't need to be repaid until you move, sell up or pass away.
Pay for Home Care
Using a reverse mortgage to pay for home care may allow you to stay in your own home for longer.
How much interest will I pay overtime?
Interest on a reverse mortgage is calculated on the daily balance and added to the loan account each month. This is known as compounding interest. Check out our compounding interest calculator to see how your equity may be affected over time.
The team at Finance Brokers Tasmania were amazing from start to finish. A special thanks to Lance for his ongoing support throughout the process. He was very professional, responded extremely timely, and helped my husband and I with the millions of questions we had. We couldn’t recommend them enough!
Helen and the team at FBT were incredibly accommodating. I often had questions about the process and Helen would promptly answer. There were no issues and she was clear in explaining the process. I highly recommend Helen and the staff at FBT.
