FAQ Reverse Mortgage

How much can you borrow?

Depends on your age, and the value of your property.

Aged 60 = 15%

Aged 65 = 20%

Aged 70 = 25%

Aged 75 = 30%

Aged 80 = 35%

Aged 85 = 40%

Aged 90 = 45%

(1% increase per year above 60)

The % is based on the age of the youngest nominated borrower.

By law, lenders must guarantee, that you will not have to pay back more than the value of your home. This is known as a “no negative equity guarantee”.

Pension Changes?? A reverse mortgage may affect your pension or other Government entitlements. You can contact the Department of Human Services (Centrelink) on 132 300 to talk to a Financial Information Service Officer about how your pension may be affected.

What can you use the money for ?

Reverse Mortgage can be used for whatever you choose. Many people use the loan to fund home repairs or improvements, repay debt, travel to visit family, pay for medical procedures, upgrade to a more reliable car, assist with in-home care, or a host of other uses to make life easier and more comfortable.

Example

Your property value = $450,000

Aged of youngest borrower = 66

Maximum lending amount = 450,000 x 21% = $94,500

For example, if you take out a reverse mortgage of $50,000, the effect of compound interest means that in 10 years’ time you will owe more than twice that amount, as the table below illustrates.

Loan term v Amount owing @ 8.5%

1 year Interest $4,420 = $54,420

2 years Interest $9,230 = $59,230

10 years Interest $66,632 = $116,632

This example assumes a fixed rate of 8.5% compounded monthly with no fees applied and no repayments being made.

What if the value of your home stays the same?

Over 20 years, your debt will grow from $50,000 to $272,060. If the value of your home stays the same over this time, your remaining equity will be $177,940.

What if the value of your home goes up?

If the value of your home goes up at the rate of 3% per year, after 20 years your home will be worth $812,750 so your remaining equity will be $540,690

Here is more information

Fundamentally, a Reverse Mortgage is designed to help you live a better retirement.

Here is our other webpage: https://mvpreversemortgages.com.au/

Check out the Moneysmart.gov.au reverse mortgage calculator

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