More Australians are exploring reverse mortgages – but it’s not easy
If you’re approaching retirement or already enjoying it, you might have heard more talk lately about reverse mortgages. You’re not alone in your curiosity – a recent study by Seniors First found that inquiries about reverse mortgages have jumped by 300% in just two years.
The idea may appeal – tap into the equity you’ve built up in your home without having to sell it. However, the process can be confusing, often leading to costly mistakes.
Why Is It So Complicated?
The short answer? There are too many options and not enough clear information. Seniors First looked at Australia’s top four reverse mortgage providers and found over 150 different variables. That’s a lot to wrap your head around!
Many of the rules and eligibility requirements aren’t publicly available, which makes it even harder to figure out on your own.
The reverse mortgage market is more complex than ever. This complexity can be overwhelming for many over-60s who are simply trying to access the equity in their homes, without making a costly mistake.
Every Situation Is Different
There’s no “one-size-fits-all” reverse mortgage. What works for your next-door neighbour might not be right for you. Your age, home’s value and location, financial goals, and family situation all play a role in determining the best option.
Getting the Right Help
The good news? You don’t have to navigate this alone. Two types of professionals can make this process much more transparent and safer for you.
Mortgage Brokers who specialise in reverse mortgages understand the “hidden” components. A good broker will:
- Compare options from multiple lenders
- Explain the differences in plain English
- Help you understand the true costs and long term implications
- Find features that match your specific needs
Financial Planners can help you see the bigger picture. We can look at your overall retirement strategy and help you understand:
- Whether a reverse mortgage fits your long-term goals
- How it might affect your pension or other government benefits
- What alternatives might work better for your situation
- How to structure your finances to best suit your needs
What about the Home Equity Access Scheme?
The government’s Home Equity Access Scheme may be an alternative to a reverse mortgage if you and your partner are looking to supplement your retirement income.
This scheme lets older Australians who are Age Pension age or older get a voluntary non-taxable loan from the government. You need to use equity in Australian real estate as security for the loan.
Visit https://www.servicesaustralia.gov.au/home-equity-access-scheme to find out more and discuss your personal circumstances with your financial planner.
Moving Forward Safely
Consider your options carefully; this is a significant financial decision that will affect your retirement and potentially your estate.
Speaking with qualified professionals can help ensure you make the right choice for your circumstances, in a way that supports your retirement dreams while protecting your financial security.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
