You’ve been hearing the term ‘reverse mortgage’ repeatedly in recent months, whether from TV ads or your closest retired friends. You’re wondering if you should be exploring this strategy as a source of cash flow. First, though, you need to answer one question: what is a reverse mortgage in Australia?
A reverse mortgage loan is essentially the exact opposite of a traditional mortgage. A conventional mortgage loan is a loan from the bank that covers a certain percentage of the cost of a home. As you pay down the mortgage, you increase your equity. Reverse mortgage loans allow you to borrow money against the equity you own in your home. When you get a reverse mortgage loan in Australia, you are converting your equity back into cash.
Reverse Mortgages in Australia: The Cash vs Equity Conversation
Now, it goes without saying that there are benefits to owning equity in your home. If you’ve paid off your entire mortgage, that means you own the house outright. You don’t have to make monthly mortgage payments anymore, you can sell the house and take almost every dollar of the sale price, and you can pass the property down to your heirs without the hassles of the bank or the mortgage.
However, there are also significant benefits to the cash value that your equity represents—hence the growing popularity of reverse mortgages in Australia. It’s not uncommon for retired seniors to be asset rich but cash poor. A reverse mortgage can rewrite this narrative, giving retirees either a big lump sum payment, a regular withdrawal or a line of credit—all borrowed against the equity of the house. From covering daily living expenses to financing medical costs, all the way to paying for things such as vacations or cars, reverse mortgages can be dynamic and useful for seniors who have retired and no longer have a regular source of income.
Is a Reverse Mortgage Right for You? Ask Reverse Mortgage Financial Solutions
At Reverse Mortgage Financial Solutions (RMFS), our job is to help you decide if a reverse mortgage is right for you. We offer face-to-face meetings with our clients, to answer questions, learn about their financial situations, determine their goals, and determine the feasibility of a reverse mortgage given their circumstances. In all cases, we take a holistic approach to reverse mortgage advice, considering not just the now of the client’s situation, but also the later. We want to help you make a plan that will benefit you in both the short term and the long term.
Our Australia reverse mortgage team offers national service, which means we can advise you and assist you with reverse mortgage matters no matter where you are. If you are interested in speaking with us and finding out whether a reverse mortgage is a smart option for you, give us a call today.