How to use a reverse mortgage for travel and holiday
Did you know that almost 25% of new customers used some of their reverse mortgage for travel and holidays?
Whether you’ve been dreaming of a bucket list escape, an Australian caravanning adventure or taking a trip to see the grandkids, finding the spare cash for a holiday can be difficult. This can be particularly difficult when there are more immediate priorities such as bills and medical expenses using up your day-to-day income.
You may think the only way to enjoy a holiday is to take out a credit card or personal loan. However, it can be tricky to keep up with the regular monthly repayments required for ongoing debt on a limited retirement income.
There is an alternative!
Instead of taking out a traditional credit card or personal loan, you could be eligible to use the equity in your home to help fund your holiday plans using a Reverse Mortgage.
But what could this look like in practice, and will you be able to borrow the right amount to cover your needs? Let’s look at an example from one of our customers, James*, who used part of his Reverse Mortgage to take a holiday.
James’s case study
James owns a property in Brisbane valued at $400,000.
At 81 years old, he applied for a Reverse Mortgage to cover a range of his retirement needs.
This included an upfront initial advance of $100,000. This amount was used for a variety of purposes including $15,000 for a holiday, $15,000 to purchase a car, $30,000 for home improvements, $20,000 for day-to-day expenses, and a further $20,000 for some outstanding debts he wished to consolidate to free up cashflow.
He also requested a regular monthly advance of $3,456 for 1 year, totaling $41,472.
The total loan amount requested was $141,472.
How much was he able to borrow?
81 (age) = 41% LVR (maximum potential loan)
41% (LVR) x 400,000 (home value) = $164,000
James was able to apply to borrow a total of $164,000.
As his application met the applicable credit criteria, he was able to lend his requested funds of $141,472.
Taking out a Reverse Mortgage helped James to live a more comfortable retirement by covering a range of needs in retirement – including a well-deserved holiday.
Want to know more? Find out more about using a reverse mortgage for travel and holiday or request your free Reverse Mortgage Guide.
Ready to apply? Get in touch, we are here to help you.
*Names have been changed to protect the privacy of our customers.
Information provided is accurate as of 1 November 2023 and may change from time to time.
Tap into the wealth in your home with a Reverse Mortgage (Seniors Loan)
How older Australian homeowners can tap into the wealth in their home using a Reverse Mortgage.
At a time when the cost of living continues to rise, being able to live comfortably is getting more and more difficult for retirees, especially for those who are relying on the aged pension as their sole source of income.
Responses from retirees included that:
91% said the cost of living was putting a strain on their budget, and
87% don’t think the aged pension provides enough to live the retirement they desire.
With 38% of customers using a reverse mortgage to supplement their income, a reverse mortgage could be a great option for retirees to combat cost of living pressures and access the wealth their home without having to sell.
The reverse mortgage also doesn’t need to just be drawn in one lump sum, you can also access ongoing regular advances – monthly, quarterly or annual loan advances for up to ten years.
Want to Know more?
If you would like to find out more about reverse mortgages, request your free Reverse Mortgage Guide.
or click the take action now button , at the bottom of the page.