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Loan Scenario of the Week (18/08/2023)

Neil (aged 66), lives in his home on the NSW South Coast. He has lived there for over 30 years and
inherited the property from his father. It is an acreage property. The zoning on the property was
rural, with the council changing it over the years. Currently the quarter of the property around the
house is zoned residential. A third of the property is zoned light industrial with the balance of the
zoned environmental protection.

There is a regular mortgage of approximately $300K to over the property.  Neil is currently working
occasionally as a consultant. But this work and receipt of payment has been sporadic since Covid. He
did over $15,000 of work in May but is yet to be paid. As a result, his mortgage shows a month in
arrears. He also has some arrears on his rates which he is paying off. He wants to take a Reverse
Mortgage to pay off his mortgage so that in future he will not be so affected by late payments and
sporadic work.

He is also looking to gift his son $100,000 to help him purchase a property. As his property is valuable
with multiple zonings he does not receive any Centrelink pension so the gifting will not effect any
pension. Other funds will be used to undertake property maintenance and fund travel. By removing
the need to make monthly loan repayments Neil will be able to live his life comfortably and stay in
his property for years to come.

Whilst he is planning on gifting funds to is son, he expects to be able to leave an inheritance to his
family despite the Reverse Mortgage, and he can later sell the property if he needs to pay for aged
care. The loan is not to top up his income but will reduce his outgoing payments so he can live
comfortably on his income. Neil intends on making payments as his work permits, but this Reverse
Mortgage has allowed him the freedom of not stressing about regularly making repayments.

(Names, locations, amounts, & other personal details have been changed to protect the client’s
identity.)

Nicholas Taylor No Comments

Loan Scenario of the Week (11/08/2023)

Thomas (aged 84) and his wife Florence (aged 85) live in their unencumbered home in the Sydney Hills District. Thomas has just fully retired and closed his business which he had been operating part time.  

Florence recently had a fall and Thomas has also found it difficult to come inside and up the stairs from the garage. As a result of this they have decided they want to install a lift in their home. They have done research and the cost is likely to be around $70,000 to $80,000.00. 

Their car is over 15 years old, so they are considering replacing it.  Thomas has a credit card with a balance of around $15,000. He would like to use funds from the Reverse Mortgage to pay this balance off. As they use it for a lot of transactions, they do not want to close the credit card. 

Then they want to have a credit line available for one off contingent events or discretionary spending such as travel. Having funds available will also mean they can pay for aged care assistance in the home if they need it in future. 

They have 7 children who are all financially independent. If necessary the property could be sold to pay for aged care if needed, but the children are also committed to helping their parents stay at home for as long as possible. The funds are not for regular expenses but for one off expense including discretionary spending (such as the adding of the elevator.) 

(Names, locations, amounts, & other personal details have been changed to protect the client’s identity.)

Nicholas Taylor No Comments

Loan Scenario of the Week (04/08/2023)

Timothy (aged 82) and Karen (aged 73) live in their home in Western Sydney. They have a mortgage with of approximately $215,000.00. The payments have increased considerably in the last few months as interest rates have risen. They, also have an arrangement with council as they have rates arrears. Timothy and Karen are looking at a Reverse Mortgage to be able to free up the cash flow currently used to pay the mortgage.

Timothy and Karen are not receiving the full Centrelink Aged pension. This is because they have received advances on their pension from Centrelink. These advances are never more than $1,000.00 and are repaid by Centrelink taking the repayments out of the pension payment. With the Reverse Mortgage in place, they will not require this in the future.

They are looking at an initial amount to refinance the mortgage and the rates. Then they want to have a credit line available to undertake some minor improvements (carpet replacement), painting and to upgrade their car which is getting quite old. They would then have some funds available for unexpected costs and one-off events that may occur in future.

(Names, locations, amounts, & other personal details have been changed to protect the client’s identity.)