A reverse mortgage is a loan designed specifically for seniors who own, or mostly own, their own homes.
Reverse mortgages allow you to borrow* funds against the value of your home at a time when you need it the most and are unlikely to qualify for any other sort of loan.
*Smooth Retirement packages are subject to approval and lending criteria.
Unlike other types of loans, there are no regular repayments. The loan is repaid from the future sale of the home, generally when downsizing later in retirement or moving into aged care.
You can use a reverse mortgage* to increase your retirement income, refinance debt, improve or maintain your home, fund medical costs or aged care, buy a new car, caravan, overseas holiday and any other worthwhile purpose.
Reverse mortgages are tightly regulated by government with inbuilt protections for borrowers.
This includes the "No Negative Equity Guarantee", which was introduced in 2012.
This means that Australian borrowers are protected by law and cannot owe lenders* more than their home is worth, regardless of what happens to the value of their property.
In addition, borrowers always retain ownership (the title remains in the name of the borrower) of their homes.
It also means that they cannot be removed from their home by the lender, nor be forced to sell their home at any time against their will. *subject to clearly stated conditions in the lender's contract but summarised as; you must remain living in the home, it must be insured and the council rates paid up.
Even if their home devalues dramatically, the borrower can continue to live in it for as long as they choose, repaying the lender only when the house is sold in the future.
For more information on reverse mortgages, click here.