Is a reverse mortgage the best way for you to get cash out of the assets you own? Would you be better off receiving your reverse mortgage as an upfront lump sum, a monthly income payment or a line of credit? What other options might be available to you, if you decide not to pursue reverse mortgage solutions?
At Reverse Mortgage Financial Solutions (RMFS), we hear all these questions regularly. As Australia’s largest specialist equity release consultancy, we are a go-to source for prospective clients and other finance professionals who want to learn more about reverse mortgages. We are happy to answer these questions and offer guidance in any way we can. Our experienced local advisors have helped countless seniors address the challenges of retirement by arranging reverse mortgages. We would be more than happy to help you set up the best reverse mortgage loan possible suit your needs.
Understanding How Reverse Mortgage Solutions Work
At the most basic level, reverse mortgage finance solutions all have the same basic idea: you borrow money against the equity of your home. Starting at the age of 60, you are eligible for a reverse mortgage loan. How much you can borrow depends on 1) the value of your home, 2) the amount of equity you have and 3) your age. The older you get, the more you will be able to borrow regarding the percentage of your home’s value. For instance, right when you turn 60, the borrowing rate you are eligible for will likely be 15-20 percent. By 70, the rates you will be looking at are likely to be closer to 25-30 percent.
Of course, just because you are eligible for a higher percentage of your home’s value doesn’t mean you have to take it. You might have a one-off expense that you need to tap your home equity to cover, or you might need more consistent payments to cover bills and other regular expenses.
You can also decide how you receive the money. The reverse mortgage options available to you will typically be 1) lump sum, 2) regular payments or 3) line of credit. You can also do some mix of these options if you prefer.
There are a lot of benefits to reverse mortgages for seniors, especially compared to other types of loans. First, you don’t need a certain level of income to qualify for a reverse mortgage loan, which makes it optimal for retirees. Secondly, you are essentially converting something you already own—your home—into cash for other expenses. With these points made, do know that your loan amount will still accrue interest like any other loan would. However, you won’t need to make regular repayments on the loan to settle the debt. In most cases, seniors don’t pay off their reverse mortgage loans (including interest) until they sell the homes on which the loans were based.
Get Advice Based on Experience and Knowledge by Sitting Down with a Broker from RMFS
As you can see, there are a lot of different factors and variables to consider when it comes to reverse mortgages. What options are best for you will depend on everything from the amount of equity you hold to the size and nature of the expense(s) you are hoping to cover. Sitting down with a qualified and experienced broker to discuss reverse mortgage advice is a must, before you apply for a loan or sign any paperwork. At RMFS, we would be happy to provide you with the detailed guidance you deserve. Contact us today to schedule a consultation appointment.