Equity Lifestyle

Home Equity Reverse Mortgage

For retired Senior Citizens

Home equity loans aka reverse mortgages are aimed specifically at retired senior citizens who own their home outright (ie 100% equity) and whose retirement income or available cash is insufficient. Equity release plans allow you unlock cash from your home in retirement.

Lifestyle

The up side of this type of loan is that it allows people to enjoy a quality of life which they might otherwise miss out on by providing access to a significant amount of money as either as a lump sum, a regular income stream or a combination of both.

No Monthly Repayments

The funds are secured by a mortgage. There are no repayments, the loan is payed out upon the sale of your home.

Interest and fees charged to your reverse mortgage are instead progressively added to the loan balance, therefore the loan balance increases over time.

Checks and Balances

Loan to Value Ratio is calculated by comparing the loan amount to the property value.

Eg. for an LVR of 25%, assuming a property value of $400,000 the loan amount would be $100,000 - LVR = 100,000/400,000 = one quarter or 25%.

There are limitations written into reputable reverse mortgage lenders' policies which guarantee that your loan balance will not grow to an excessive amount, the LVR of these loans is also limited for this reason.

The maximum equity release available is related to your age, eg. for a couple in their early 60's this is typically 25% or less.

This conservative starting figure, combined with normal housing market increases go a long way towards maintaining a reasonable ratio between the loan balance and the value of your home.

Requirements you must fulfil

You will be expected to maintain your home to a reasonable standard thus ensuring it's continued value and to notify the lender should there be any profound changes to your living arrangements.

Get Professional Advice 1st !

Seek independent legal advice and consult with a licensed financial adviser before committing yourself to an equity release loan of this type.