Reverse Mortgage News | Seniors First Blog

25
Jul

ASIC Mortgage Broker Review [Infographic]

The Australian Securities & Investments Commission (ASIC) recently released an infographic to explain the regulator’s review of the mortgage broking market and understand the effect of current remuneration structures on the quality of consumer outcomes.

The review reveals that mortgage brokers are paid an average of 0.54% or $2,700 for a $500K home loan.

It also claims that when taking out a loan, customers who use mortgage brokers tend to borrow more, have lower property values, have higher loan to valuation ratios, spend more of their wage on the mortgage, take out more interest only loans, and get the same rate as direct customers.

It is interesting to take note that this review is based on home loans and not reverse mortgages. And at Seniors First, we believe that you can take advantage of great benefits when you choose to work with a reverse mortgage broker.

In fact, we have specified below the top four reasons why you should work with a broker when you are looking around for a reverse mortgage.

1. More Options to Choose From

A reverse mortgage broker like Seniors First works with the top providers of home equity loans, and our specialisation in providing this specific financial product allows us to offer you with more choices. Working with a reverse mortgage broker will allow you to explore more choices from various lenders.

2. Professional Advice

A simple online search will provide you with the top providers of reverse mortgage near your area. But with a professional broker to guide you, it will be easier to choose and apply for a loan package you need without going through the usual hassle. Reverse mortgage brokers have already established a good working relationship with home equity lenders, so they know the complexities of the process so you can be sure of a favourable result.

3. Save Valuable Time

 

A reverse mortgage loan is different than the usual home loan. Hence, you might need to spend some time studying its unique rules and terms before you finally decide to avail of an offer. You can save a lot of time if you work with a reverse mortgage broker who will explain to you the intricacies of the available products. On top of that, your broker will also take charge of filing your application and will regularly update you on the status of the loan.

4. Save Money

The ASIC review also noted that those who took home loans through brokers made 16% less additional payments. This is possible because brokers will always try to find you the lowest rates and fees so you can save more dollars.

For more information on how a reverse mortgage broker can help you with your home equity loan, you can call Seniors First on 1300 745 745 or send as an inquiry to info@seniorsfirst.com.au.

 

20
Jul

St. George Reverse Mortgage No Longer Available

St George has announced it is dropping mortgage and equity-release products after Westpac made a high-level review of their product range and underwriting standards. The review is set to reexamine loans and lending packages under current market conditions. Consequently the St George Reverse Mortgage product has been removed from sale.

The review came at a time when the other four major banks continue to increase the required deposit for home loans and apply strict requirements for interest-only loans and other credit-related products.

In a confidential memo sent to mortgage brokers, St George said that Westpac (owner of St George bank) reviewed their suite of home loans to simplify their systems and increase productivity in operations.

Aside from withdrawal of equity release products such as their reverse mortgage product, the Senior’s Access Loan, St George is also dumping equity access low documentation loans and some fixed rate low documentation home loans.

Equity access low documentation loan is a revolving line of credit secured against the borrower’s property. A low documentation loan is perfect for those who are self-employed who cannot provide usual loan requirements such as tax returns and other financial statements.

Lenders in general face new challenges as new record levels of household debt arise versus static income. An independent analysis suggests lenders to review their underwriting standards in order to deal with changing market conditions.

Are Reverse Mortgage Loans Still Available from Seniors First?

Yes. There is no need to worry about this news. If you are over 60 years and you need to release home equity, a reverse mortgage loan from Seniors First is still a great option. As a leading reverse mortgage broker, we work with some of the biggest names in home finance such as IMB Bank, Bankwest, and Heartland so we can provide you with enough options to find the equity release solution you need.

You should also note that this recent move from Westpac does not only isolate reverse mortgage products for cancellation. The bank is also reassessing other lending packages such as insurance and credit products, as the bank tries to adjust its lending criteria to changing market conditions.

Westpac might ditch their reverse mortgage loan packages, but the need by senior Australians for great equity products still persists and in fact growing.

Many of our reverse mortgage borrowers use their equity fund retirement living, refinance their debt, renovate their homes, buy a more practical vehicle, or take a holiday after years of hard work.

To help you learn more about reverse mortgages, you can download our FREE REVERSE MORTGAGE GUIDE.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.

 

 

20
Jun

Reminder: Age Pension will Change on July 1

When the Commonwealth government introduced the age pension in 1909, the average male life expectancy was 55. Not many Australians reached the age eligibility of 65 for the entitlement.

With significant strides in healthcare, men and women today are expected to live well into their 80s, which has cost the government around $ 41 billion in 2016.

Effect of Living Longer on our Age Pension

As a response, the Australian government will change the pension starting a few days from now. On July 1, the qualifying age for pension will begin to increase progressively by six months every two years until the qualifying age hits 67 in 2023.

[Related Post: Age Pension qualification age changes next year]

As people live longer and healthier lives, the government believes that people can work longer and increase superannuation balances to have a comfortable retirement.

The following pointers will help you identify your age pension:

  • If you were born between 1 July 1952 and 31 December 1953, you qualify for age pension at age 65 years and six months.
  • If you were born between 1 January 1954 and 30 June 1955, you qualify for age pension at age 66 years old.
  • If you were born between 1 July 1955 and 31 December 1956, you qualify for age pension 66 years and six months.
  • If you were born from 1 January 1957 onwards, you will receive age pension by age 67 years.

Take note that if this change affects you and you don’t have a job or you have a short term medical condition, you can claim Newstart Allowance from the government. On the other hand, you are eligible for Disability Support Pension if you have a long-term medical condition.

Alternative Ways to Live a Comfortable Retirement

It might be impossible to live a comfortable retirement if you depend on pension alone. According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, couples need $ 640,000 in retirement savings, while single people will need around $ 545,000. And with the rising cost of living in Australia and the cost involved in aged care, living beyond 67 can be a challenge.

Of course there is the superannuation, which can help you supplement your retirement income and have some money for investment. However, a report from ASFA reveals that fewer than one in 10 Australians is taking their superannuation seriously. Very few Australians are paying extra money into their superannuation, which may not be enough to fund a comfortable retirement.

There are still alternative ways to make sure that your retirement will not be a struggle. One solution is taking out a reverse mortgage, which is also known as home equity loan.

[Related Post: Changes in Pension to Boost Interest in Reverse Mortgages ]

Reverse mortgages will allow you to unlock the equity in your home without the need to worry about regular repayments. You can receive the proceeds in either a lump sum, a monthly income, a line of credit, or a combination. This is usually a recommended product for retirees who have already paid off their mortgages and need cash for their expenses such as aged care, debt consolidation, home renovation, and more.

To help you learn more about reverse mortgages, you can download our FREE REVERSE MORTGAGE GUIDE.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.

 

Regards,

Darren

30
May

Why Reverse Mortgage Is Not for Everyone?

Reverse Mortgages have been available in Australia since the 1990s, but it is only in the recent years that these are becoming popular as a viable financial product for homeowners. Even though reverse mortgages, also known as home equity loan, has drew some flak from the media because of inherent drawbacks, public demand has been increasing because it can really help seniors who are assets rich but cash poor.

 

But despite of its viability, a home equity loan is not always recommended for everyone. In fact there are certain circumstances where a reverse mortgage can be detrimental to one’s finances. This blogpost will help you explore the proper use of a home equity loan and know whether it is a good idea to get one.

What is a Reverse Mortgage?

Reverse mortgages will allow you to unlock the equity in your home without the need to worry about regular repayments. You can receive the proceeds in either a lump sum, a monthly income, a line of credit, or a combination. This is usually a recommended product for retirees who have already paid off their mortgages and need cash for their expenses such as aged care, debt consolidation, home renovation, and more.

[Related Post: Reverse Mortgages in Australia, Seniors First Video ]

When Is It A Good Idea to take a Home Equity Loan?

Those who are qualified for a reverse mortgage can take advantage of the following:

  • Access to cash for your needs
  • Tax-free funds with no limits on where you spend the money
  • Flexible repayment scheme
  • No income qualifications

But despite of these benefits, stricter regulations in Australia requires lenders and brokers to be more responsible in offering reverse mortgages. Hence, not everyone can just take this loan.

In general, retirees who are willing to decrease the proceeds from the sale of their property by the loan amount plus interest charges are ideal candidates. These are usually retirees who want to stay in their homes until they pass away. Retirees who are also looking to decrease their taxable estates may also be ideal candidates for reverse mortgages.

Reverse Mortgage Risks

The following are the risks usually associated with reverse mortgages:

  • Interest rates are higher compared to the traditional home loans
  • The total debt may quickly rise when you choose a no-regular repayment scheme as the interest may compound over time (You can use our reverse mortgage calculator to know how much money you will owe over a certain period )
  • Your heirs will receive less proceeds from the value of your property
  • Taking a reverse mortgage may affect your eligibility for pension

Most reverse mortgages also require homeowners to maintain the property in good condition for the duration of the loan. This can be challenging for retirees who have health problems, and paying for maintaining the property can be luxury for some. Therefore, you should always consider this factor and clarify this requirement before making any decision.

If you like to pass your home to your heirs, you should also carefully consider the fine print of reverse mortgages. Thanks to the ‘negative equity protection’ rule, you cannot end up owing the lender more than the value of our home. However, the property may still be repossessed if the balances exceed the value of the home. Your heirs may need to pay the balance before they can re-acquire the property.

Reverse Mortgages Can Help the Right Individual

A reverse mortgage can provide significant benefits for the right person, but you should always consider all the risks and clarify the fine print before taking this type of loan. This is the reason why we highly recommend working with a financial advisor who specialises in home equity loans so you can gain a comprehensive perspective of how reverse mortgages can affect your finances, especially during retirement.

To help you learn more about reverse mortgage, you can download our FREE REVERSE MORTGAGE GUIDE.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.

Regards,

Darren

30
Apr

How Reverse Mortgages Help the Australian Economy

How Reverse Mortgages Help the Australian Economy

The Australian government is now implementing long-term precautionary measures to respond to the rising cost of aged care. Based on the Intergenerational Report released by the Commonwealth of Australia in 2015, the $42 billion that the government pays for pensions is projected to grow to $160 billion by 2055. This will surely put a lot of strain on our economy because about 80% of seniors today are still expected to receive pensions four decades from now.

KPMG also noted that this situation may place a significant pressure on the Australian workforce as the number of working taxpayers for every elderly person will decrease from 4.5 to 2.73. And by 2055, our expenditure for aged care will increase from 0.9% to 1.7% of GDP. With such scenario, there is a high chance that we will see increased taxes and pension cuts in the future.

Australian Aged Pension May Not Be Enough

It is clear that the aged care system in Australia is not sustainable, and it will continue to do so if our retirees will completely depend on our pension system. In fact, the average pension received by seniors may never be enough to fund a comfortable retirement. A report released by OECD reveals that one-third of Australian pensioners are living below the poverty line.

[ Related Post: Top Five Reasons Why You Should Get Reverse Mortgage Loan this 2016 ]

With insufficient pension, limited income, and increased expenses, retirees may need resort to selling their properties such as family homes to cover the cost of aged care. Some retirees may need to face debt, and families may have to shoulder some of the expenses, which may put significant strain on their finances.

Home Reverse Mortgage Can Help You and the Economy

Many seniors wish to stay and received aged care at home, where they can spend their retirement with their loved ones. Hence, the prospect of selling the home and move into an aged care facility is usually not an option for many. This is among the many reasons why reverse mortgages, also known as home equity loans, are becoming popular options.

A reverse mortgage is a type of loan designed for retirees and pensioners and quite beneficial for those who are assets rich but income poor. Seniors First offers this financial product that will allow people from age 60 to unlock the equity of their homes to fund their needs such as aged care, debt consolidation, home renovation, and many more. Just like any other type of loan, interest will be charged, but you are not required to make regular repayments.

[ Related Post: Reverse Mortgages in Australia, Seniors First Video ]

Reverse Mortgage can help the economy because:

  • It will provide much-needed cash for retirees to finance their needs
  • It will serve as a supplemental fund for insufficient pension
  • It will mobilise the idle assets estimated to be worth around $625 billion

As a matter of fact, the government also offers its own version of reverse mortgage known as the Pension Loans Scheme or PLS, which grants 45% of home equity. In 2014, the PLS released loans amounting to $31.9 million, which is just a blip in the ocean when you compare it to the $625 billion worth of properties that can be unlocked by senior homeowners.

 

However, not all Australian pensioners can take advantage of the PLS, as it is only available as an income stream. Hence, if you need lump sum cash, you can try reverse mortgage loans offered by private lenders.

If you want to learn about reverse mortgage in detail, you can download our guide, Reverse Mortgage Secrets. This FREE special consumer report will help you learn more about reverse mortgage and how you can enjoy your home equity safely and save thousands.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.

Regards,

Darren

23
Feb

Changes in Pension to Boost Interest in Reverse Mortgages

Changes to the age pension starting this year affected hundreds of thousands of senior Australians.

Because of the changes, you should be 65 years or older to be qualified to receive pension. Starting July 1, 2017, the required aged for retirees who can receive pension will be 65 years and 6 months. On top of that, the qualifying age will also increase by 6 months every two years. Hence, by July 2023, you must be 67 years old so you can be eligible to receive age pension.

RELATED POST: Age Pension qualification age changes next year

While these changes in the age pension can help the government to support more retirees in the future, they also left many retirees and soon-to-be retirees to go back to drawing board and think how they can support themselves during retirement. In this case, alternative solutions can be helpful such as reverse mortgages.

Reverse Mortgages Can Help Cash-Poor Asset-Rich Seniors

With the changes in the age pension test, experts believe that the interest in alternative financial schemes such as reverse mortgages will go up in the coming years.

But what is a reverse mortgage?

Basically, a reverse mortgage will use your home equity to secure a loan from a bank. If you do own your home, and you need fund for your retirement needs, you can use reverse mortgage product to unlock the property’s value. And no, you will not lose your home ownership and you can still live in your own home and spend your retirement with your loved ones.

Over the years, reverse mortgage gained its footing and in fact, a Productivity Commission report about housing issues for Australians has underscored the importance of tapping the home equity as additional income. Meanwhile, the government also encourages retirees to try reverse mortgage as it will also lower dependence on the public purse.

A report released by Deloitte in 2015 identified five major reverse mortgage lenders including Bankwest, Commonwealth Bank of Australia, P&N Bank, Macquarie Bank, and Bank of Melbourne. But with the changes in the age pension, as well as other factors such as volatility in the markets and lower interest rates, other providers are expected to launch reverse mortgage products this year.

Currently, there are about 400,000 reverse mortgages in Australia, which is worth around $3.6 billion or $90,000 per mortgage on an average.

Read the Reverse Mortgage Fine Print Before You Sign Up

Just because you are worried that your age pension will not be enough or you are sitting in a fortune locked in your home equity doesn’t instantly qualify you for a reverse mortgage loan.

You are eligible for a reverse mortgage loan if you have already completed paying your mortgages before hitting retirement, you don’t have any plans to move out, and you have a great need for more money for your retirement such as aged care, additional income, or necessary home renovation.

You can receive the loan proceeds as a lump sum if you have to fund large purchases to help you live a more comfortable retirement. Meanwhile, you can also receive the proceeds in form of a regular payment if you are looking into a supplemental income on top of your age pension. Lastly, a line of credit or a cash reserve can be ideal if you need an emergency stash of money during emergencies.

Take note that getting a reverse mortgage loan can significantly affect your retirement as well as the inheritance of your loved ones. Hence, you should carefully read the fine print, consult a financial advisor, and talk to your family about it.

To help you learn more about reverse mortgage, you can download our FREE REVERSE MORTGAGE GUIDE.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.
Regards,

Darren

19
Dec

Age Pension qualification age changes next year

The retirement plans of people born on or after 1 July 1952 will change beginning next year. From next year, the qualifying age for age pension entitlements will start to increase progressively by six months every two years.

This change has been enacted to deal with the challenges of Australia’s ageing population. As people live longer and healthier lives, the government believes that people can work longer and increase superannuation balances to have a comfortable retirement.

Today, you must be 65 years or older to be eligible for age pension. Beginning 1 July 2017, the qualifying age for people who will receive pension will be 65 years and six months. Every two years, the qualifying age will increase by six months. By 1 July 2023, you need to be 67 years old to qualify for an age pension.

If you were born between 1 July 1952 to 31 December 1953, you qualify for age pension at age 65 years and six months. If you were born between 1 January 1954 to 30 June 1955, you qualify for age pension at age 66 years old. If you were born between 1 July 1955 to 31 December 1956, you qualify for age pension 66 years and six months. If you were born from 1 January 1957 onwards, you will receive age pension by age 67 years.

Though the numbers are relatively easy to follow, its effects take a whole level of worry for upcoming retirees. We understand that the change is made to make the taxpayer-funded age pension sustainable for the years to come and we cannot argue with that. We just have to accept the bitter fact that one cannot rely on pension alone to have a comfortable retirement at a retirement age of their choice.

That is why, more than ever, we have to be serious in preparing other sources of income for retirement.

One is superannuation, then there’s reverse mortgage. A reverse mortgage allows you to effectively access the equity in your home without losing ownership or leaving your family home.

With or without age pension, you deserve a good quality of retirement. A reverse mortgage is an equity release product that is created with retirees like you in mind.

To help you learn more about reverse mortgage, you can download our  FREE REVERSE MORTGAGE GUIDE.

Feel free to call Seniors First Finance at 1300 745 745 or post your comments below.

Regards, Darren

Watch the video below from the  Australian Government Department of Social Services.

18
Nov

Reverse Mortgages in Australia, Seniors First Video

What exactly is a Reverse Mortgage, and how does a Reverse Mortgage work?

These are two of the big questions most seniors have when beginning to research options for releasing home equity in retirement. This great animated explainer video, sponsored by one of our favourite lenders, is a quick way to get a good understanding of Reverse Mortgages in Australia.

Click here to find out which REVERSE MORTGAGE LENDERS are best for you. 

Enjoy!

15
Nov

Reverse Mortgage Marketing: The U.S Experience

As many readers may be aware, Reverse Mortgage loans are much more prevalent and established in United States than in Australia. So it can be a useful experience to look to the American market for comparisons and possible future trends that may emerge locally. To that end it’s interesting to see that the veteran actor Tom Selleck (Magnum, P.I. and Blue Blood) recently appeared in a TV commercial promoting reverse mortgages for an American mortgage lender.

Beyond the 71-year-old actor’s credible appeal, his pitch can be effective in convincing the market to use the equity locked in their homes so they can generate cash needed for retirement.

Reverse Mortgage: Too Good to be True?

“It’s not another way for the bank to get your house, and it’s also not too good to be true,” says Selleck in the TV commercial. Many American seniors may agree, but it is always best to apply a critical eye to any celebrity endorsement and instead explore the facts about the product being advertised – in this case reverse mortgages.

Although the U.S product differs in some key respects, through an Australian reverse mortgage you can access a credit line or a lump sum using your home as a security. However, you remain full registered owners of the property (the bank does not take control of your property) and you continue to live in your own home as long as you want. Some people think that this is “too good to be true”, because once they understand how reverse mortgages actually work many Australian seniors do indeed take the view that it’s a lot better than selling your home when you need cash.

The amount that you can borrow will depend on the value of your home, and your age. You can choose to access the fund in lump sum, in regular payments or credit line. And like any other financial products and services, there is fine print to review and below are top critical points you should understand:

  • You still need to pay for property taxes, maintenance cost, and insurance.
  • You may choose not to pay for the loan but the interest will be added to your balance each month, so the interest will compound over time.
  • The loan should be settled first before you can move out or sell the property.
  • The loan should be settled once both you and your spouse have passed away.

FACT: Reverse Mortgage is Not for Everyone

Just because you are already a senior and you own your home doesn’t automatically qualify you to get reverse mortgage.

You are an ideal candidate for a reverse mortgage loan if you have already paid off your mortgages before retirement (or there is a modest amount left owing which can be refinanced by the new reverse mortgage loan), you like where you live (no plans to move out), and you have a genuine need for more money to fund retirement.

You can choose to receive the loan proceeds as a lump sum if you need to finance large purchases to help you with your retirement, while a monthly payment is ideal if you need supplemental cash on top of your pension or superannuation. Meanwhile, if you just need to have a standby fund for emergency expenses, a line of credit (cash reserve) can be ideal.

Remember, reverse mortgage is a big financial decision, so you should do your due diligence first. Tom Selleck might have caught your attention, but be sure to understand this financial offer well. To help you learn more about reverse mortgage, you can download our FREE REVERSE MORTGAGE GUIDE.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.

Regards, Darren

Photo credits: Alan Light, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=1470255

 

18
Oct

Simply Irreversible

(Article published by Mortgage Professional Australia Issue 16.11)

A combination of economics and demographics is bringing reverse mortgages back into the spotlight, and there’s a need for brokers to write them. MPA, in partnership with Heartland Seniors Finance, explains how you can bring reverse mortgage lending into your business.

DEMOGRAPHIC TRENDS rarely make for a viable business strategy. For instance, we all know that Australia’s population is ageing, but how can you actually cater for older customers with no intention of changing properties? That’s where reverse mortgages come in.

Reverse mortgages – which enable borrowers to release equity in their homes – have been brought back to prominence by an ageing population who want to stay in their homes, and by government policy and economics. By 2030, 3.6 million more Australians will be aged over 65 and thus eligible for reverse mortgages, according to CommBank, which has dubbed these customers ‘Peter Pans’. More immediately, the Coalition Government has already begun making changes to super pension rules, and most obviously, the cash rate is now at a historic low of just 1.5% and annual price growth has risen by 9% in Sydney and 7.2% in Melbourne.

Lenders are seeing the opportunity: the number of reverse mortgage providers has recovered substantially from a low point of five following the GFC.

For one of those lenders, Heartland Seniors Finance, potential reverse mortgage clients will look at brokers. CEO Andrew Ford says “brokers play a key part in mortgages and the mortgage market in Australia…brokers are the most valuable part of our distribution”.

Accordingly, they’re making it easier to get accredited, putting their course and test online in October. Heartland has its own accreditation, while some providers require brokers to complete a course through Senior Australians Equity Release (SEQUAL), the industry association for providers of equity release products.

Reverse mortgages are an area in which advice is essential – indeed, independent legal adviser is mandatory and that’s why consumers want a broker’s assistance, says Darren Moffatt, managing director of Seniors First.

“In some respects it’s a simple product, but it also has lots of implications if handled incorrectly. Seniors like to have someone guiding them through the process, particularly around product selection and lender selection.”

Moffatt, who’s based in Sydney, has been writing reverse mortgages since 2005. He’s seen the sector undergo two rounds of regulation – the NCCP in 2010 and more specific regulation in 2011 – but doesn’t believe it’s made his job much harder.  

“There is more paperwork, but if you were doing the right thing beforehand you wouldn’t find it onerous; certainly we haven’t,” he says.

Like some other brokers, Moffat views increased regulation as an encouraging development. However, Peter Bolitho, director of Reverse Mortgage Finance Solutions on the Sunshine Coast, who’s been working with reverse mortgages for over 20 years, notes there’s “definitely been more regulation, but there are areas of regulation which still cause me some concern”.

Reverse mortgage clients come to Bolitho through referrals from branches, other brokers and increasingly through the company’s website as older people make more use of the internet.

Brokers should take note of who’s making the application, he warns. “My concern is when you have a son or daughter making an application on behalf of their parents, the danger of elder abuse is too great, I think.”

Brokers and lenders need to make sure that the funds will primarily benefit their borrower, but “without face-to-face contact it’s very difficult to establish that”.

Heartland Seniors boss Ford says brokers should feel comfortable writing reverse mortgages. “We’ve got a really robust and thorough fulfilment process which includes independent legal advice and gets the customers to talk to their family – and attest to the fact they have.”

Among other safeguards ‘hard coded’ into the product is the obligation to give the borrower a loan projection using ASIC’s calculator, and to explain alternatives – whether the borrower would be better off downsizing, or borrowing from friends and family – as well as how a reverse mortgage could impact on their pension and inheritance. With oversight from the broker, lender, client’s solicitor and possibly a financial planner, “if there’s something that consumers are uncomfortable with it’s going to be discovered somewhere along the line” says Senior First’s Moffat.

The timeframes involved in reverse mortgage lending can be incredibly diverse. While lenders’ turnaround is typically a couple of weeks – longer if refinancing is involved – the main delay is the client’s decision time: unlike buying a new house, there is no ‘trigger’ for reverse mortgage borrowers, explains Bolitho. There can be triggers – the client running out of money due to a car breakdown, for example – although these are generally preceded by the client researching reverse mortgages as a solution. At Seniors First, Moffat finds the client’s decision-making time is typically six to eight weeks (although his longer client took seven years); Bolitho’s figure is four to six weeks.

Many elements of applying for a reverse mortgage will be familiar to brokers: submitting paperwork, credit approval and receipt of funds. When deciding which product, however, there are a couple of details to watch out for. The interest rate is crucial, given many lenders won’t require any payments and this interest gets compounded. Regular fees should also be watched out for, for the same reason – Moffat says he tries to avoid them – and the LVR may be crucial to the client if they’re looking to get as much money out as possible.

In terms of conditions, there is some differentiation among lenders. Since 2012 the law has stipulated that reverse mortgage borrowers can never owe more than their house worth. At Heartland Seniors they also guarantee clients lifetime occupancy, explains Ford, and allow partial or full repayment at any time without a penalty. Some lenders allow flexibility as to whether they receive the funds as a lump sum, a line of credit or a regular advance as this can have consequences for pension eligibility. ASIC also advises borrowers to check the condition for live-in partners should the sole title-holder pass away.

Although commission rates are similar, the amounts involved in reverse mortgages are typically small – around $90,000 at Heartland Seniors Finance – and this presents a challenge for brokers. Most brokers cover the gap with a fee, explains Bolitho. “I believe that the majority of brokers in this area now charge a fee-for-service, which is discussed with and divulged to the client, because it’s the only way you can maintain a specialisation in this area.” Clients rarely take issue with a fee, he adds. “I’ve had probably one client in the last five years that complained about it. Clients understand that, as long as they’re getting that level of service.”

Reverse mortgages, it should be noted, typically stay on the books for longer and increase as clients draw out extra funds, meaning that over the long term they can form an important part of a broker’s book. Furthermore, for Moffat, writing reverse mortgages is a ‘feel-good experience’.

“You’re actually helping people: these loans have a very significant impact on people’s lives. That aspect of the work shouldn’t be underplayed; it’s why we do what we do.”

There’s another reason: necessity. As Moffat concludes, “this [over 60s] demographic is the fastest-growing part of the population; reverse mortgages provide a great opportunity for brokers to tap that part of the market…over the next 10 years you’re going to see this part of the market grow very rapidly.