Support for Reverse Mortgages
During a mortgage and advice forum in Sydney this week, Bluestone Equity Release has called on the Government to consider alternative methods such as reverse mortgages to ensure older Australians are able to fund their own retirement rather than rely on Government pensions.
A reverse mortgage basically enables people 65 years or over to borrow against the equity in their home and access cash without making any repayments on the borrowings during their lifetime.
The loan is then typically repaid when the borrower dies or sells the property to move elsewhere.
Generally speaking, the interest rate charged on a reverse mortgage is slightly higher than standard variable home loan interest rates, although generally lower than on personal loans.
If a retired person elects to borrow against their home using a reverse mortgage they may ultimately reduce their children's inheritance because they are eating into the equity built up in the family home over many years.
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