Are reverse mortgages a good idea?
I believe they are.
Just think – instead of selling your property, you stay in your home, which is probably a better house or better location, than where you would downsize to.
The costs to sell and buy in Australia are 3% sale costs + approx 3% buy/moving costs.
How do I decide on a provider?
One of the most important decisions you will make about a reverse mortgage loan is which lender to choose. This decision may have a long-term impact on you and your family, so it’s crucial you get this right. Criteria to consider include the flexibility of the product being offered, ongoing fees and charges, protections offered to customers, and what loan options are available.
What costs are involved?
Loan interest is compounding, which means the loan balance increases over time as interest is added to the loan. There are fees and charges for setting it up, including for your independent legal advice. As an estimate: Lender establishment fee $950 + Government charges $450 + lender valuation fee $330 + your legal advice fee $300. These fees can be deducted from your loan.
It is also sensible to get independent financial advice, and legal advice is compulsory when taking out a loan.
How much can I lend with a reverse mortgage?
Two major factors in determining the maximum loan are:
· 1 your age + 2 home value.