Reverse home loans are available in Australia for persons aged 60 and older and are secured by equity in their home, vacation home, or investment property. They can be used for any purpose and do not need repayment for the life of the loan.
In essence, you are not required to repay this type of loan until you sell your house or the last remaining borrower dies. The title to the house will remain in your name, and depending on your circumstances, you might receive your money in a variety of ways.
How does a Reverse Mortgage Work?
A reverse mortgage, like a forward mortgage, is secured by the home. When the homeowner sells his or her home or dies, the proceeds go to the lender to settle the reverse mortgage’s principal, interest, mortgage insurance, and fees. Any excess selling revenues go to the homeowner (if still alive) or the homeowner’s estate (if the homeowner has died). In rare circumstances, the heirs may elect to pay down the mortgage to maintain the home.
To be eligible for a reverse mortgage in Australia:-
- The borrower must be over a particular age, usually 60 years old; if there are many borrowers on the mortgage, the youngest borrower must meet the age criteria.
- The borrower must own the property, or the existing mortgage balance must be low enough that the reverse mortgage proceeds will extinguish it, leaving the reverse mortgage as the only loan secured against the property.
Loan size and cost of reverse mortgages
In Australia, reverse mortgages can be as much as 50% of the property’s worth. Several factors influence the actual amount of money available (loan size):
- The age of the borrower, with a larger sum available at a younger age.
- Current interest rates.
- Property worth.
- The location of the property.
- Program minimum and maximum; for example, depending on the lender, the loan could be limited to a minimum of $10,000 and a maximum of between $250,000 and $1,000,000.
FAQs
Got questions? Find answers to some of the most commonly asked questions about our financial solutions, processes, and services to help you make informed decisions.
LMI is a third-party insurance premium payable by you as the borrower, to protect the lender against the potential loss of money if the borrower is unable to repay the home loan. Generally, an application with a Loan-to-Value Ratio (LVR) of 80% or more may result in the borrower having to pay Lender’s Mortgage Insurance.
Extra payment is an excellent feature of a good mortgage deal. Here, your lender lets you make lump-sum additional payments along with your regular monthly payment. Making extra payments allows you to shorten the length of time you are paying your mortgage. Since your balance is being paid off faster, you will also have fewer total payments to make, thus lowering your interest. At Reliiance Financial Solutions, we can help you find the most suitable mortgage deal for you. We have a range of lenders that allow you to make as many extra repayments as you want, whenever you want, without attracting any penalties.
Stamp Duty is a government tax imposed on contracts, with the amount usually calculated as a percentage of the contract value. In layman’s terms, it is the tax charged for your legal documents to be ‘stamped’.
If you are planning to buy a property, it’s crucial to factor your State’s Stamp Duty into your budget.Chances are, based on your circumstances and state of domicile, you might be able to obtain a stamp duty exemption, or concessions (discount) against the purchase of your first home. Stamp duty laws get changed often, so be sure to check your State Government’s website for the most up-to-date information.
Did you know that some lenders would allow you to cash out any extra repayment you made whenever you need the money? You read that right. This useful mortgage feature is called “redraw facility”. You can withdraw any extra repayments or lump sum payments you make over the life of the loan. At Reliiance Financial Solutions, we will explain all mortgage products to you, including those which allow you to the redraw option.
Testimonials
Discover how we’ve helped our clients navigate their financial journeys with personalized solutions. Read their stories of success and empowerment below.
A 5-STAR RATED FINANCIAL SOLUTIONS PROVIDER BY OUR CLIENTS
At Reliiance Financial Solutions, we have been privileged to have worked with hundreds of remarkable individuals and families.
Very few things come close to receiving their genuine appreciation of our services. All we can say in return is – the pleasure was all ours.
It is also our pleasure to share some client testimonials with you. Please click on Video Testimonials to view them all. Use the buttons at the bottom of the screen to navigate through the videos.
