We all like to picture our retirement through rose tinted glasses, but the reality is a little less promising. Both the economic system and demographic landscape are undergoing rapid changes and these are having a direct impact on the retirement income of Australians.
Only the very wealthy are assured a comfortable retirement without finding a source supplementary to their savings and those who do not have this luxury need to carefully consider how to best plan for theirs. Here are a few ways a reverse mortgage loan can assist you enjoy for retirement you deserve.
Flexibility
Your home is likely your biggest asset and worth a substantial amount. Because a reverse mortgage in Australia allows you to borrow against this substantial value, it is an extremely flexible arrangement. With a reverse mortgage, you can choose a payment structure that will best suit your lifestyle. Whether this takes the form of a lump sum, a regular income, a line of credit or a combination of these options is up to you.
Negative equity protection
In 2009, legislation came into effect that protects reverse mortgage holders from debt that exceeds the value of their home. Once a contract ends and your house is sold, you are not liable if the sale price fails to cover your debt. On the other hand, any money from the sale above your debt level goes to your estate. This safeguard against debt is one of the key factors for the increase in reverse mortgages in recent years.
Industry monitoring
Many people are understandably wary about using their cherished home and biggest asset as a means to obtain sufficient retirement income, which is why a regulatory body has been established. The Senior Australian’s Equity Release Association of Lenders (SEQUAL) has developed a stringent code of conduct aimed at protecting reverse mortgage borrowers from unethical practices. In addition to ensuring protection against negative equity, SEQUAL also requires the provision of legal advice before a contract is agreed upon.
These are just three of the many reasons why reverse mortgages have become the retirement income stream of choice for many Australians. The safety and flexibility afforded by a reverse mortgage is unrivalled by other options, giving those who select to unlock their equity in this way greater peace of mind. There are few financial sectors more highly regulated than reverse mortgage lenders and these protections have been designed with the concerns of everyday Australians in mind. With a ‘no negative equity’ guarantee and SEQUAL support, you can feel assured that you are getting sound financial and legal advice. If you want to discover how to optimise your retirement income, contact Reverse Mortgage Finance Solutions today and discuss your options.