home loans - Reverse Mortgages FAQs - x inc finance

Reverse Mortgages - Answers to common questions

1. What is Reverse Mortgage?
2. How does Reserve Mortgage work?
3. Once I take the reverse mortgage, is the amount set?
4. Is my pension affected by payments received via a reverse mortgage?

1. What is Reverse Mortgage?

Reserve Mortgage is generally available to residential property owners aged over 60.Different lenders have different age entry levels. These mortgages allow you to release funds using the equity in your property and are secured by a registered first mortgage on your principal place of residence and potentially your residential investment property, dependent upon the lender. more about reverse mortgages

2. How does Reserve Mortgage work?

Let's say you own a property, worth $400,000. You take out a reverse mortgage and borrow, let's say $100,000. Depending on the product, you can take the $100,000 as either a lump sum or regular income. Either way, you pay interest on the borrowings. Those interest repayments are capitalised - added to the amount you owe. You can make repayments as you go, but you're not always obliged to. You generally can't sell or rent out the property, and you remain responsible for maintenance and similar sorts of costs. When you die, the lender sells your home, and takes what they're owed - principal (less any repayments) plus capitalised interest. Anything left over goes to your estate. more about how reverse mortgages work

3. Once I take a reverse mortgage, is the amount set?

As your property increases in value and you increase in age, you will be able to take out more equity from your property. more about how reverse mortgages work

4. Is my pension affected by payments received via a reverse mortgage?

Centrelink can provide detailed information regarding any impact on benefits but in most cases, there is no reduction in benefits (seek advice). (http://www.centrelink.gov.au ) more about how reverse mortgages work

Got another question you would like answered in plain English?

* Please enter your question/s here:
* First Name:
* Last Name:
* Postcode:
* Business Hours Phone:
* Email:
* Enter word verification in box:
		* indicates mandatory fields