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Reverse Mortgage Loan

Whether you’re making improvements around the home, wanting to take the holiday of a lifetime, or looking to upgrade your car, a reverse mortgage loan can help get the funds you need. Contact our experienced mortgage brokers for more information.

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What is a reverse mortgage?

A reverse mortgage is a type of loan available to homeowners, typically older adults, that allows them to convert a portion of their home equity into cash without selling their home or making monthly mortgage payments. Unlike traditional mortgages where the borrower makes payments to the lender, in a reverse mortgage, the lender makes payments to the borrower.

Reverse mortgage; couple looking at their finances | Oceania Finance

How a reverse mortgage works

A reverse mortgage allows homeowners to access a portion of the equity they have built up in their home over time. Similar to a standard home loan, borrowers will be charged interest on the loan amount, both of which must be repaid to a lender.

However, where a standard home loan requires regular repayments throughout the life of the loan, a reverse mortgage is typically paid off in full upon the sale of the property. This will usually occur when the owner sells the property, goes into aged care, or passes away.

Typically, to qualify for a reverse mortgage, homeowners must be aged 60 or older and own their home outright or have a significant amount of equity.

How much can I borrow?

The amount of money you can borrow will depend on your individual circumstances and the lender’s requirements. The most common determining factors include:

  • age of the borrower
  • appraised value of the home
  • current interest rate
  • loan terms and conditions of the lender

You can estimate how much you can borrow through Moneysmart’s reverse mortgage calculator or by contacting our friendly team of mortgage brokers. Using a personalised approach, our team of experts will assess your financial situation to determine your borrowing power and the best lenders to match. Contact us today to get started!

 

Who is a reverse mortgage good for?

Reverse mortgages can provide financial flexibility for older homeowners who want to access their home equity without selling their home. A reverse mortgage can be good for homeowners who need funds to:

  • Finance their retirement and live more comfortably.
  • Make improvements around the home, such as installing handrails or improving accessibility.
  • Consolidate debt.
  • Take the holiday of a lifetime.
  • Upgrade their car.
  • Cover medical expenses such as hip replacements or in-home care.

While a reverse mortgage can provide borrowers with financial flexibility, it may also impact their financial future and inheritance plans. So it’s important to carefully consider the terms, costs, and implications of a reverse mortgage before proceeding.

Consulting with a mortgage broker or financial advisor is advisable for anyone considering a reverse mortgage.

 

Which banks offer reverse mortgages in Australia?

Due to tighter regulations brought in by the Australian government, there are a limited number of banks offering reverse mortgages. Most major banks no longer offer reverse mortgages, however some options are available from mutual banks and small lenders. Using a mortgage broker, like our team at Oceania Finance, can make it easier to find a reverse mortgage lender.

 

Oceania Finance mortgage brokers are here to help

Applying for any kind of home loan can be a confusing and stressful experience. But Oceania Finance is here to help! Our team will be with you every step of the way and cut through all the confusing jargon and complicated terms so you know exactly what you’re committing to. And with our personalised approach and tailored solutions, you’ll know your future financial and property goals are in safe hands.

Contact us today to chat with our friendly experts!

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Reverse Mortgage Loan Frequently Asked Questions

If you haven’t used a finance broker before, you probably have some questions. Let’s help you get some answers.

Are reverse mortgage payments tax free?

Generally, reverse mortgage payments are tax-free as they are not classed as income and are instead classed as loan proceeds. However, this can vary depending on each individual situation and the current tax rules set by the Australian Taxation Office (ATO). It’s important to confirm your tax obligations directly with your account or the ATO.

Can a reverse mortgage be refinanced?

It is possible to refinance a reverse mortgage. But, reverse mortgages can be more complicated than standard home loans, so it can be beneficial to consult a mortgage broker.

At Oceania Finance, our versatile team has extensive experience across all home loans, including reverse mortgages. We’ll guide you through the process and make sure you get the best deal for your individual circumstances. Contact us today for more information.

Can a reverse mortgage be paid off?

Typically, a reverse mortgage is paid off when the home is sold, you pass away, or when you enter into aged care. While it is possible to pay off a reverse mortgage early, it’s important to note that there may be fees or penalties associated with early repayment, depending on the terms of the loan agreement.

Does a reverse mortgage affect your pension?

Whether or not a reverse mortgage will affect your aged pension will depend on:

    • Your individual circumstances
    • The purpose of your reverse mortgage
    • How you receive your reverse mortgage payment (i.e. in a lump sum or through regular payments)

If you are planning on taking out a reverse mortgage, it is best to contact a financial adviser or a mortgage broker to understand how a reverse mortgage will impact your pension and financial situation.

If you need advice on reverse mortgages, have a chat with Oceania Finance mortgage brokers today!