Reverse Mortgage News | Seniors First Blog

30
Mar

REVERSE MORTGAGE: CORONAVIRUS UPDATE

A message from our CEO 

Due to the coronavirus pandemic, we want to inform all our clients and colleagues that Seniors First continues to serve its clients as before. 

Reverse Mortgage Loans Are Still Available 

Seniors First lending partners are part of the banking industry and so are considered essential businesses and remain available to serve you. 

Reverse mortgage rates are available from 5.15% and our lending partners can help you unlock your home equity to top-up lost share or superannuation income, possible future health expenses, and provide you peace of mind with access to funds at call. 

Seniors First Representatives Are Available Online 

To do our part to slow the spread of the COVI-19 virus, we are taking precautions to avoid close contact. All home visits have been cancelled until further notice. 

Our reverse mortgage brokers can provide you reverse mortgage advice through online access only. 

We are happy to answer your inquiries through a 100% remote solution (phone calls, email, or video conferencing). 

Your Reverse Mortgage Brokers Are Here to Help 

If you are a current client and you have a circumstance that would require emergency access to information, please contact your local branch representative and ask for assistance to determine the best option for the situation. 

If you are not able to talk with your branch, Seniors First Customer Service is available Monday to Friday from 9 a.m. to 5 p.m. Call us on 1300 745 745. 

We Want to Reassure You 

Seniors First is here for you in these challenging times. We will continue serving the needs of customers while considering the safety of our colleagues and the Australian public. 

Thank you for your patience and understanding as we remain on high alert to keep track of the situation and implement needed changes to ensure continuity of service during these uncertain times. 

We’ll continue to update you through email, Seniors First website, and our social media channels.

Thank you for your ongoing trust in us. 

Darren Moffat

CEO 

 

 

 

12
Mar

How does a Reverse Mortgage affect your Age pension?

The impact a Reverse Mortgage may have upon your eligibility for the Aged Pension will depend on individual circumstances, and there are a number of important factors to consider. It ultimately depends on the purpose, and how you use the money from a Reverse Mortgage.  There are three ways you can take Reverse Mortgage funds:

1. Money taken as a lump sum

If the money is taken as a lump sum and spent on an asset that is assessable by Centrelink, such as a car, the value would count towards the asset test of the pension. This would also combine with your other assets (not including the value of your home) which could take you over a certain threshold and reduce your pension.

From 1 July 2018, the threshold where pensions begin to reduce is when your assets amount to more than the following.

Under Centrelink rules, if you draw a lump sum from a Reverse Mortgage, up to $40,000 is exempt from the assets test for up to 90 days, so the money needs to be spent within this time limit to avoid it becoming an assessable asset.

Any money drawn down is immediately subject to deeming by the Centrelink income test until you spend it. So for example, if you draw down $40,000, it will be deemed to be earning 1.75% (around $27 per fortnight). Single home owners can earn $172 per fortnight without affecting their pension, while for home owning couples, the amount is $304. If you purchase an asset that produces income, such as shares or an investment property, any derived income would be assessed as part of the income test.

Finally, if the Reverse Mortgage lump sum is spent on a non-assessable asset, such as home improvements or a holiday, then the amount would not be assessed under the income or assets test.

2. Money taken as an ‘income stream’

If the loan is taken as a regular income stream to spend on living expenses or non-assessable assets, then it would be unlikely to affect your pension. It is not counted as ‘income’ by the income test and, if spent quickly on bills and lifestyle, should have no effect on your age pension. But if the money builds up in your bank account, it is subject to the Assets Tests (see above).

3. Money in reserve (like a line of credit)

Funds that are available to you for the future, but which are not yet drawn down, are not assessed under either the income or assets tests for Centrelink purposes.

(NOTE: some lenders have in the past offered Reverse Mortgages with an ‘offset account’ attached. Funds within an offset account MAY be deemed an assessable asset. If unsure, please consult with Seniors First). 

The information in this fact sheet is for general information purposes only. It does not constitute Financial Advice, and should not be relied upon as such. While Seniors First used information published by Centrelink in developing this fact sheet, it is neither approved by Centrelink, nor attempting to speak on behalf of Centrelink. Rules and figures change, as do individual circumstances. Seniors First strongly encourages those seeking a Reverse Mortgage to speak to a Financial Information Services (FIS) officer at Centrelink directly about the effect (if any) a Reverse Mortgage may have on their pension entitlements.     

24
Feb

‘Government Reverse Mortgage’ (PLS) vs Home Equity Release Lenders

In the 2018 Federal Budget, the Australian government introduced key changes that allow seniors with full age pension entitlements to access the government-funded Pension Loans Scheme (PLS) (or often dubbed the ‘government reverse mortgage’). 

While the PLS was established in 1985 by the Hawke Government, very few retirees were aware of it and fewer have used it because of certain limitations on eligibility. 

In fact, in 2010, there were only 710 seniors who had outstanding loans under the PLS. But all that changed from 1 July 2019 when new the Turnbull Government broadened eligibility that opened the loan option to more pensioners. 

[ RELATED POST: Pension Loans Scheme: Government Reverse Mortgage to be Expanded

You must meet the following requirements before you can access the PLS: 

  • You or your partner are Age Pension age 
  • You are qualified to receive a qualifying pension
  • You own or your partner owns a real estate in Australia
  • Your real estate property is covered with adequate and appropriate insurance 
  • You are not bankrupt
  • You are not subject to a personal insolvency agreement

How Much Can You Get from the PLS? 

The amount of loan you can get under the PLS will depend on your age and how much equity you own in your real estate property. 

Through Services Australia, you can access a maximum loan amount, which is the total loan that you can receive under the scheme. 

But take note that the loan proceeds is not in a lump sum and instead paid into your account in fortnightly payments. 

The PLS is still a Limited Option for Seniors 

It is true that the expanded PLS will greatly benefit full pensioners with no other alternatives to sustain their income. 

But it is also true that the scope of the PLS can be called limited because you can’t receive the loan amount in lump sum. 

You may only receive the proceeds of the PLS as an income stream that will be bundled in your pension. 

[RELATED POST: Pension Loans Scheme Extension Benefits Age Pensioners But Still Limited

Therefore, PLS is not ideal for seniors who need a sizeable amount needed for important expenses such as Refundable Accommodation Deposit (RAD). 

RAD is an upfront payment to the residential aged care home that ranges between $300,000 and $400,000. 

While the extension of the PLS is commendable, it is not for everyone. 

If you need a lump sum amount to pay for aged care and other needs during retirement, a Seniors First reverse mortgage is a more suitable solution. 

It will allow you to access the wealth of your home without the need to sell it, and you can use the loan proceeds (LUMP SUM) to improve the standard of living when you stop working. 

The table below provides a comparative insight between the PLS and a standard reverse mortgage offered by Seniors First: 

 ‘Government Reverse Mortgage’
(Pension Loans Scheme )
 Standard Reverse Mortgage
Increase monthly cash flow Yes Yes
Real estate needed as security Yes  Yes
Repayable at any time? Yes  Yes
Buy a new car No  Yes
Fund home improvements No  Yes
Fund an overseas holiday No  Yes
Provide a ‘line of credit’ No  Yes
Taxable? No  No

If you want to know more about reverse mortgage, you can call Seniors First on 1300 745 745 or visit www.seniorsfirst.com.au 

30
Sep

Hold the Reverse Mortgage! You Might Be Eligible for the Age Pension After All

Allyson Bailie from Retirement Essentials encourages Australian seniors to check their eligibility for the Age Pension before getting a reverse mortgage

A reverse mortgage can make a huge difference to the lives of Australian seniors who are struggling to make ends meet. 

With the rising cost of living in Australia and limited income opportunities for the elderly, taking out this type of loan can really be an attractive option: 

  • Access to cash to supplement your income, pay for aged care services, or even buy a car or renovate your home
  • Flexible repayment scheme
  • No income qualifications
  • No need to move out of your home

But despite its popularity, a reverse mortgage is unavailable to some seniors due to age or location restrictions, or is unsuitable because of concerns they may have about: 

  • Higher interest rates compared to traditional mortgages
  • Interest may compound over time if you choose a no-regular repayment scheme
  • Your family will receive lower proceeds from the value of your home 

Check Your Age Pension Eligibility First 

One of the main reasons seniors apply for a reverse mortgage because they need more income in retirement. Superannuation was only mandated by the Australian government in 1993, so the current generation of retirees often have very limited super funds. 

In addition, some seniors don’t get any Age Pension at all. 

So as a way to supplement retirement income, they unlock the equity of their home through a reverse mortgage. 

But why take out a loan if you’re actually eligible to receive an Age Pension? 

There are cases when Centrelink has incorrectly declined pension entitlements such as the story of Chris from Sydney Hills District. 

Chris’ application was first declined by Centrelink, but when he asked for help from Retirement Essentials, he was approved and started receiving his pension four weeks later. 

Chris says, “I found relief through Retirement Essentials. They helped me streamline the Age Pension application process, and got my Pension approved where Centrelink couldn’t.”

So if you are thinking about getting a reverse mortgage to supplement your income, be sure to check your Age Pension eligibility first. 

Even if you are already receiving a part Age Pension, or if one spouse is receiving the pension whilst the other is not, you should check to see if your household qualifies for more. 

(NOTE: If a couple is receiving the full age pension there is no opportunity to access more)

Accessing additional Age Pension entitlements may assist in avoiding, or at least delaying, the need for a reverse mortgage. 

To check your Age Pension eligibility for FREE, you can use this online service from Retirement Essentials. 

More Benefits for Retirement Essentials Members 

Beyond checking Age Pension eligibility, Retirement Essentials makes it easy for Australian seniors to apply for their Age Pension entitlement once approved. 

Our customers also benefit from being better informed of pension rule changes via our informative email updates. This way they avoid surprises of unexpected changes in pension entitlements. 

We would love to give you a helping hand. To learn more about Retirement Essentials, visit our website at www.retirementessentials.com.au or call us on 1300 527 727 during office hours. 

Allyson is the Head of Member Experience at Retirement Essentials. She has always believed that older Australians deserve better access to support and services. 

 

29
Jul

Reverse Mortgage TV Ad: Heartland Seniors launches television campaign

The reverse mortgage lender, Heartland Seniors Finance, recently launched a new reverse mortgage TV ad campaign. 

It’s amusing and witty, but addresses the serious need to help Australian seniors become more aware of the financial options a reverse mortgage loan can offer. Watch it below:

 

Breath of Fresh Air 

Heartland’s TV ad is a breath of fresh air. 

It’s the first TV campaign for a reverse mortgage product in over 10 years in Australia. It will go some way to quenching the demand for information on reverse mortgages, and will hopefully help educate people on this important financial product for Australian seniors.

A reverse mortgage can help homeowners over 60 years, who are “cash-poor but asset-rich”. 

By applying for a reverse mortgage solution, the home equity can be ‘unlocked’ to secure a loan from a lender. Seniors can access more cash, to enjoy a better retirement lifestyle. 

 

Government Is Now Supportive of Reverse Mortgage 

Since 2011, the Australian government has imposed a series of stricter policies to regulate the provision of reverse mortgages.  Increased regulation if a good thing, as it helps safeguard the interests of Australian seniors and ensures that they understand the inherent risks of ‘home equity release finance’. 

The signs are that the government is increasingly supportive of reverse mortgages. 

The Productivity Commission even released a report in 2016 stating that most older Australian homeowners on low incomes could live a modest retirement if they convert a percentage of their home equity to liquid cash. 

Plus, the government also recently expanded the Pension Loans Scheme (PLS), which is similar to a private reverse mortgage though it has some limitations (borrowers can not draw a lump sum, for instance). 

 

How Much Can I Borrow, Reverse Mortgage ? 

The amount that you can borrow for a reverse mortgage will depend on your age, and the value of your own home. 

You may choose to receive the loan proceeds in lump sum, in regular payments, or credit line. 

And be sure to read the fine print before you sign any reverse mortgage loan agreement. 

Here are some important points that you should remember about reverse mortgage loans: 

  • 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 must be repaid first before you can sell the property.
  • The loan must be repaid once both you and your spouse have passed away.
  • The bank does not ‘take your home’. The lender cannot force a sale of your home as long as you do not default under the agreement by breaching key obligations. 

Consult a Reverse Mortgage Specialist Today

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 to talk to a reverse mortgage specialist or post your comments below.

Regards,

Darren

18
Apr

Five Things Australian Seniors Should Know About the Federal Budget 2019-20

Australia’s federal budget for 2019-20 raised mixed reactions.

There are people praising the Coalition for coming up with the first budget surplus in 12 years (excessive of $7.1 billion) while some members of the society such as seniors advocates call the budget a failure to impress older Australians.

Leading independent advocacy group National Seniors Australia described the budget as “disappointing, especially for age pensioners.”

For retirees or those with parents or relatives who are nearing age pension, here are five things that you should know about the federal budget.

1. Softer Superannuation Rules for Australian Seniors

The Federal Budget will allow Australians over 65 years to make voluntary superannuation contributions without meeting the current work test.

This change will take effect from 2020 to 2021, and will potentially benefit around 55,000 Australian seniors.

The same group will also be allowed to make three years worth of non-concessional contributions, which are presently capped at $100,000 per year to their superannuation in one year. Only Australians under 65  are allowed to make these arrangements.

The government also plans to increase the age limit for the spousal contributions from 69 to 74. At present, Australians aged over 70 are not allowed to receive contributions from someone else.

2. Additional Drugs to Be Subsidised by the Government

New drugs for kidney, bladder, liver and skin cancer will be subsidised by the government through the Pharmaceutical Benefits Scheme (PBS).

The government intends to spend $81.5 M to cut the cost of one drug from $155,000 a year to just $40 for every script.

Bavencio (avemulab) is an important medicine used for the treatment of rare and aggressive skin cancer metastatic merkel cell carcinoma. It will be included in the PBS starting May 1st.

Based on a report by Cancer Council, two in three Australians will be diagnosed with skin cancer by the time they are 70.

The breast cancer drug Ibrance (palbociclib) will also be subsidised by the government by cutting the $55,000 a year to just $40 each script.

In 2015, 16,852 women and 145 men were diagnosed with breast cancer in Australia. The risk of being diagnosed with breast cancer by age 85 is 1 in 8 for women and 1 in 651 for men.

The budget also includes $70.8 million over seven years for regional cancer diagnosis, treatment, and therapy centres.

3. Energy Assistance Supplement for Pensioners

The government will provide one-off payments to around 4 million welfare recipients that will cost around $285 million to help cover electricity bills.

This includes power bill assistance to around 2.4 million Australian pensioners ($75 for singles and $125 for couples).

The assistance will be released this year provided the bill will be passed by July 1st.

4. More Investment for Research and Other Initiatives Related to Ageing and Dementia

The 2019 Budget includes $185 million investment into research in aging and dementia.

It also includes $35.7 million over five years for increased dementia and veterans’ home care supplements.

Maree McCabe, CEO of Dementia Australia said this inclusion in the budget is a good start but does not speak to the heart of the problem for people living with dementia their families and carers.

“With 447,000 Australians living with dementia, 1.5 million people involved in the care of someone living with dementia and the prevalence projected to increase to 1.1 million people by 2058, the impact of dementia cannot be ignored,” McCabe added.

5. Additional Funding for Aged Care

The government has allocated total funding of $21.6 billion for aged care, which is an increase of more than 50% since 2013-14.

This includes $282.4 million additional budget for 10,000 new home care packages to support older Australians who want to stay at home. This increases the number of new home care packages to 40,000 from last year.

An additional budget of $5.9 billion over two years from 2020-20 will be spent by the government to extend the Commonwealth Home Support Programme.

Furthermore, $320 million is now allocated to boost the 2019-20 for residential aged care and 13,500 new residential care places.

The added budget of $84.3 million over four years will be used to provide more support for young carers under the Integrated Carer Support Service.

Reverse Mortgage – Alternative Solution

While the Federal Budget 2019 has its merits, it cannot accommodate all the needs of Australian seniors.

For example, given the increased demand for home care packages and the aging population of Australia, long lead times (usually longer than one year) for getting such services is seen as a major issue.

While some services are in place, there is still no certainty that you can access such services in time. This is why it is best to look for alternative solutions to make sure you can live a comfortable life when you stop working.

One viable solution is to unlock your home equity through a Reverse Mortgage loan.

If you are already 60 years old, you own your own home, and you are in need of cash for your retirement needs, you can choose to convert the equity of your own home and transform it into either income stream or lump sum.

A Reverse Mortgage loan is often recommended for retirees who have already paid off their mortgages and require money for their expenses such as home renovation, aged care accommodation, and debt consolidation.

If you want to learn more about how Reverse Mortgages work, you can download our FREE REVERSE MORTGAGE GUIDE.

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

 

Regards,

 

Darren

 

 

 

 

 

 

 

4
Apr

Will A Reverse Mortgage affect My Age Pension? – Q&A

[transcript}

Hi, it’s Don Murdoch here, from reverse mortgage broker, Seniors First.

A common question I’m asked is “Will a Reverse Mortgage affect my Age Pension?”

The quick answer is: maybe.

If you’re a Queensland Age Pensioner thinking about Reverse Mortgage, this should be the focus of your attention right now.

I’ve done hundreds of Reverse Mortgage loans & in my experience there’s usually no impact on the borrower’s pension.

BUT every case is different, and you can’t be too careful.

Here are the top warning signs a Reverse Mortgage could affect your pension:

· You’re on a part-Age pension · You want to draw a large lump sum; or · You intend to ‘gift’ money to family

Now this is really important, because if you get it wrong: – it can cut your Age Pension entitlements. – reduce your retirement income. – cause financial stress.

So what’s the answer?

Well, I’m going to share the top THREE actions you can take to minimise risk.

AND I’ve got a special FREE offer too…

Thanks for watching & bye for now.

4
Apr

How to minimise interest cost on a Reverse Mortgage loan

[transcript]

Hi, I’m Andrew Cate.

I’m the NSW Reverse Mortgage broker with Seniors First.

Today’s lesson is: ‘how to minimise interest cost on a Reverse Mortgage loan.”

I’ve helped over 400 seniors obtain a reverse mortgage.

And if there’s ONE topic that people always want to talk about, it’s ‘compounding interest’.

To recap: Reverse Mortgage borrowers are not required to make regular repayments.

The debt, plus any accumulated interest and fees is paid when the property is sold.

What does this mean? Well the monthly interest charge will be ‘capitalised’ each month – added onto the loan – so that over time, you will pay ‘interest on interest’.

Now this ‘compounding interest effect’ may be especially important, if: – you’re drawing a large lump sum. – you want to preserve home equity for children. – you need to pay aged care costs in the future.

SOLUTION: I’ll now share THREE ways you can reduce the interest cost on a Reverse Mortgage loan.

I’ve also got a special FREE offer for you…

Follow the instructions on screen to claim it now. Thanks for watching & bye for now.

29
Oct

Commonwealth Bank Reverse Mortgage No Longer Available

The Commonwealth Bank Reverse Mortgage will be withdrawn from sale. CBA (and its subsidiary Bankwest) will no longer offer reverse mortgage loans to new borrowers from the beginning of next year. However, it will still continue lending for current borrowers.

CBA made the decision to discontinue “Equity Unlock for Seniors” and Bankwest reverse mortgage (Seniors Equity Release) as part of the bank’s streamlining of its products to lower costs, remove duplication and simplify lending.  It is the last of the major lenders to withdraw from the reverse mortgage sector amid rising costs and tougher regulation.

Macquarie Bank and Westpac dropped from the reverse mortgage sector late last year.

What is a Bankwest Reverse Mortgage Loan?

The reverse mortgage loan offered by CBA and Bankwest allows eligible elderly Australians to access the wealth of their home without the need to sell the property. The loan proceeds are generally used to improve the standards of living during retirement.

Relying on government Age Pension may not be enough to live a comfortable life when you stop working. Unfortunately, many pensioners don’t have the available cash for their daily needs, but they are living in homes that are valuable.

Rather than selling the property, seniors can unlock the home equity and convert it to cash that they can use for various needs such as debt consolidation, home renovation, aged care, and even buying a car or funding a holiday.

After the withdrawal of CBA and Bankwest from the sector, the remaining players will be P&N Bank, IMB Bank, and Heartlands Seniors’ Finance.

Meanwhile, the federal government will soon offer its own low-cost reverse mortgage scheme known as the Pension Loans Scheme starting July 2019.

Are Reverse Mortgage Loans Still Available from Seniors First?

Yes. If you are over 60 years old and you need to unlock your home equity, you can still avail of a reverse mortgage loan from Seniors First. Even without Commonwealth Bank Reverse Mortgage and a Bankwest reverse mortgage, we can still provide you with options for a reverse mortgage loan.

Moreover, the decision of CBA does not only affect reverse mortgage products. The bank is also reviewing its insurance and credit portfolio as the banking industry is adjusting to tougher regulations and changing market conditions.

CBA is discontinuing its reverse mortgage loan, but the need by elderly Australians for a comfortable retirement will remain and in fact growing. In fact, CBA is projecting a 20% increase in the number of Australians who will be over 65 years old in the next 12 years.

Australian seniors are usually cut off from mainstream lending because many of them are no longer earning regular income to service the loan.   

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

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

Regards,

Darren

5
Sep

Government to Reverse Retirement Age Pension Policy?

Prime Minister Scott Morrison announced today that he will quickly scrap the Government’s plan to increase the retirement age pension to 70. “We will ratify it next week. The pension age going to 70, gone,” Morrison said in an interview with Today Show.

In the 2015 Budget, the Coalition decided to gradually increase the qualifying age for pension to 70. However, the new PM said that the last Budget comes with many measures that can help Australians live “a longer, healthy and more active life.”

Positive News for Australian Seniors

At Seniors First, we view this news as a positive one, because we believe Australian seniors should receive their entitlements as soon as they reach 65. But it is important to note that the pension age has already started going up from 65 years and Australians who are turning 66 in the first half of 2019 will have to wait to July in order to qualify.

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

Many Australians will depend on the age pension as their primary source of income once they retire. Even those who have saved money in their super are looking forward to receiving their entitlements to cope with the costs of living.

Strain on Government Finances

The move to raise the pension age to 70 was called a “sensible plan” as it will avoid too much strain on government finances.

In a report published in 2014 by the National Commission of Audit (under the Abbott government) revealed that without policy change, the cost to taxpayers of the age pension would rise from $39.5 billion in 2013-14 to $72.3 billion in 2023-24.   

The report also projects that by year 2055, the number of Australian seniors over 65 years old would increase to 8.9 million, which would represent about 1 in 5 of the expected population.

As of this writing, there is no clear plan from the current government on how it could ensure a sustainable age pension system that would provide a safety net for Australian seniors in the future.

Reverse Mortgage – Alternative Solution

There is still no certainty if the current government plan to scrap the move to increase age pension will really push through, and there is no guarantee that the Australian pension system will sustain your needs when you reach retirement. That is why it is ideal to look for alternative solutions to make sure you can live a comfortable life when you stop working.

One viable solution is to unlock your home equity through a Reverse Mortgage loan.

If you are already 60 years old, you own your own home, and you are in need of cash for your retirement needs, you can choose to convert the equity of your own home and transform it into either income stream or lump sum.

A Reverse Mortgage loan is often recommended for retirees who have already paid off their mortgages and require money for their expenses such as home renovation, aged care accommodation, debt consolidation, and more.

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

But take note that this product is not for everyone. Only those 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.

If you want to learn more about how Reverse Mortgages work, you can download our FREE REVERSE MORTGAGE GUIDE.

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

Regards,

Darren