Reverse Mortgage Protection
All Reverse Mortgage loans have been legislated by the Federal Government in the National Consumer Credit Protection Act 2009 (NCCP) and are regulated by the Australian Securities and Investment Commission (ASIC).
No Other Home Loan in Australia Offers the Following Consumer Protections:
Independent legal advice must be obtained by borrowers; All borrowers must be advised by a solicitor before signing the mortgage contract to ensure they are fully aware of the obligations of the borrower and the bank. Some lenders also require an Independent Financial Advice Certificate from an accountant or financial planner as an added protection for the borrower.
Borrowers must receive a forecast of future net equity. This is calculated on the ASIC Moneysmart calculator. This calculator projects forecasted equity, using varying interest rates and a conservative estimate of capital growth. The purpose of this calculator is to give a conservative forecast of the effect of the loan on the equity in their home at 5, 10 and 15 year intervals.
A “No Negative Equity Guarantee” is provided to all borrowers by ALL financial institutions as part of the regulations in the National Consumer Credit Protection Act 2009. This means the borrower can never owe more, at the time of the loan repayment, than their home is worth no matter how long they have the loan.
All credit advisers/finance brokers must be SEQUAL accredited and follow the SEQUAL Code of Conduct. Go to the SEQUAL Code of Conduct page for more information. They must also be accredited with the lender providing the finance. Both SEQUAL and each financial institution have separate accreditation courses to ensure the credit adviser/finance broker is qualified to write your reverse mortgage and can advise you on the best product to suit your circumstances.
Both lenders and credit advisers must disclose all costs associated with not only establishing the loan, but ongoing costs.
Each lender and credit adviser must participate in the ASIC approved External Disputes Resolution Scheme. This ensures the borrower can lodge unresolved complaints with an independent organisation who will act as an impartial mediator.
The mortgage contract must be written to abide by all relevant Australian Consumer Protection Laws, Regulations and Codes of Conduct.