Reverse Mortgage News | Seniors First Blog

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The Commonwealth Bank Reverse Mortgage will be withdrawn from sale.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

28
Aug

ASIC Reverse Mortgage Loan Report 2018

ASIC Reverse Mortgage Loan Report 2018 – released

As foreshadowed in our last post, the much awaited ASIC Reverse Mortgage Report was released today. This is an important document for all key stakeholders who comprise the Australian Reverse Mortgage ecosystem:

  • Seniors / reverse mortgage borrowers
  • Reverse Mortgage Lenders
  • Reverse Mortgage Brokers
  • Regulators
  • Solicitors
  • Financial advisers
  • Family members of borrowers
  • Centrelink
  • Government

I am still reviewing the findings of the report in detail, but some of the early key findings of the report are:

1. The Reverse Mortgage credit market needs more supply.

ASIC has rightly identified that the reverse mortgage lending market is highly concentrated. More lenders are required to mitigate supply-side risk and offer more choice and product innovation to senior consumers. There is a perceived lack of alternatives to Reverse Mortgages available for seniors who want to release home equity.

2. Reverse Mortgages meet the ‘immediate objectives’ of borrowers effectively

ASIC interviewed 30 reverse mortgage borrowers as part of its consumer research. It found that the reverse mortgage enabled borrowers to:

(a) maintain their current living arrangements without continuing to
experience financial stress;
(b) afford a better quality of life;
(c) obtain short-term finance; or
(d) have a general safety net for living expenses:

3. Elder abuse is an area to watch.

Although reported incidents of elder abuse connected with Reverse Mortgage loans appears low, ASIC are nevertheless right to be vigilant for potential future issues. They are proposing some further safeguards in this area.

4. Reverse Mortgage Lenders can do more to educate borrowers on long-term risks.

More work needs to be done by reverse mortgage lenders and brokers to ensure that that borrowers are fully cognisant of possible long-term risks. Some terms in Reverse Mortgage loan contracts were also fund to be potentially “unfair”. Here is the ASIC infographic:

asic reverse mortgage 2018

 

For the full report go HERE.

I will come back with some commentary on the report soon. If you have any questions about this, or what it means for you, please leave a comment below.

Regards, Darren

2
Aug

Reverse Mortgage Loans in 2018 Australia

Although it is just a bit more than halfway through 2018, we can already say that this year is a big one for the Reverse Mortgage industry. With tighter government regulation, expansion of Pension Loan Scheme (PLS), and the growing market demand, the Reverse Mortgage niche is still a vibrant and stable industry.

Government Reverse Mortgage Review

In late 2017, the Australian Securities and Investments Commission (ASIC) has conducted a surveillance exercise on Reverse Mortgages to test the compliance with responsible lending obligations, measure consumer understanding of the products, borrowing experiences and outcomes.

Aside from scrutinizing Reverse Mortgages, ASIC is also monitoring the provision of financial advice to the elderly.

This only proves that Reverse Mortgages are one of the most heavily regulated financial product in Australia, which is crucial to protect the interest of our customers.

Government Reverse Mortgage Expansion

While the Australian government tightens the regulation on private Reverse Mortgage providers it is now expanding its own equity product for Australian seniors with full age pension entitlements.

As part of the 2018 Federal Budget, eligible seniors can access the government funded Pension Loans Scheme at a max of $17,800 annually starting 1 July 2019 if legislation passes.

The Australian Government has been offering the Pension Loans Scheme through the Centrelink as a voluntary reverse equity mortgage for older Australians who need to supplement their retirement income.

[ Related Post: Pension Loans Scheme Extension Benefits Age Pensioners But Still Limited ]

At Seniors First, we see this government program as a validation of our efforts to promote Reverse Mortgage as a way for senior Australians to live a better retirement. The recent expansion further attests to the benefits of unlocking home equity to fund needs during retirement age.

Current Private Reverse Mortgage Lenders

As of press time, the following companies are offering Reverse Mortgage products in Australia:

  • Bankwest (Seniors Equity Release)
  • Commonwealth Bank (Equity Unlock Loan)
  • Heartland Seniors Finance (Reverse Mortgage)
  • P&N Bank (Easy Living Access Loan)
  • IMB Bank (Reverse Mortgage)

As a leading Reverse Mortgage broker, Seniors First works with many of the providers mentioned above.

Some Banks Withdrew Their Reverse Mortgage Products

Despite the growing demand for Reverse Mortgage loans in Australia, some lenders decided to drop their home equity products.

Macquarie and St. George both withdrew their Reverse Mortgage loan product in 2017.

St. George announced last year that Westpac (owner of St. George bank) reviewed their suite of home loans to simplify their systems and increase productivity in operations.

[ Related Post: St. George Reverse Mortgage No Longer Available ]

Aside from the withdrawal of Reverse Mortgage and equity release loan products, St. George also discontinued its equity access low documentation loans and some fixed rate low documentation home loans. 

(It is important to take note that this move from Westpac does not only affect Reverse Mortgage products. The bank also discontinued or repackaged other financial products such as insurance and home loans as the bank tries to adjust its lending criteria to changing market conditions).

Growing Market Demand

While some lenders have dropped their Reverse Mortgage offerings, the need by seniors Australians for home equity release products still persists and is in fact growing.

Australians are becoming more aware of Reverse Mortgage, and they usually turn online to learn more about this financial product.

According to Google Australia search traffic, the keyword “Reverse Mortgage” has around 2900 monthly search volume.

Meanwhile, the keywords “Reverse Mortgage loan” and “Reverse Mortgage calculator” has 590 and 390 monthly search volumes respectively.

Popular keywords also include ANZ Reverse Mortgage, NAB Reverse Mortgage, and Reverse Mortgage westpac.

People also search for Bendigo bank Reverse Mortgage but in fact, this refers to the Homesafe equity release product that is typically available in Sydney and Melbourne.

Ask Me About Reverse Mortgages

Just like other financial industry in Australia – banking, insurance, property loans – Reverse Mortgage is undergoing some change. Most of these changes are positive, and given that Reverse Mortgages have been offered since 1992, the market is now quite mature.

If you are interested to learn more about Reverse Mortgages, you can reach me at 1300 745 745 or you can post your comments below.

Regards,

Darren

16
May

Pension Loans Scheme Extension Benefits Age Pensioners But Still Limited

I was recently quoted in an opinion piece written by Bina Brown and published by the Australian Financial Review. Entitled “How to use the budget pension loan scheme for aged care help”, the article explores the idea of unlocking the family home as the “fourth pillar” of the retirement income system.

The decision of the government to extend the Pension Loans Scheme (PLS) to include all eligible retirees can be perceived as a validation of our efforts in the private sector to promote reverse mortgage as a sound way for Australian seniors to live a better retirement.

[ Related Post: Pension Loans Scheme: Government Reverse Mortgage to be Expanded ]

Through a reverse mortgage, also known as a home equity loan, eligible seniors can unlock the wealth of their home without the need to sell the property. The loan proceeds can be used to improve the standard of living during retirement.

Despite Extension, the Pension Loans Scheme Is Still Limited

In the article, I expressed my belief that the PLS extension will be of greatest benefit to full pensioners with no other options to increase their income. However, it is also a fact that the scope of this “government reverse mortgage” is limited because it doesn’t offer a lump-sum option.

The PLS can only be taken as an income stream that is added to the borrower’s pension. In comparison, a reverse mortgage loan from Seniors First can be accessed in three ways:

  • a lump sum
  • a regular income stream
  • cash reserve
  • or a combination of all

With my experience in helping senior borrowers unlock home equity through reverse mortgages, most people want only a small to a medium lump sum, often with further access to a standby fund to mitigate longevity risk. At Seniors First, the average loan we originate is around $85,000, and the loan proceeds are often used for debt consolidation, home improvements, and aged care financing.

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

PLS is fairly limited because it will not help Australian seniors who need a sizeable lump sum needed for residential aged care in form of the Refundable Accommodation Deposit (RAD). The RAD is an upfront lump sum payment to the aged care home, which may average between $300,000 to $400,000. However, the income stream for PLS can be used to settle the Daily Accommodation Payment (DAP) that is another option to move into aged care.

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 reverse mortgage is another option available.

It is important to take note that the changes in the PLS will start on 1 July 2019, if legislation passes.

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

10
May

Pension Loans Scheme: Government Reverse Mortgage to be Expanded

Australian seniors with full age pension entitlements can now access the government-funded Pension Loans Scheme at a max of $17,800 annually as part of the key changes introduced in the 2018 Federal Budget.

The Australian Government has been offering the Pension Loans Scheme through the Centrelink as a voluntary reverse equity mortgage for older Australians who need to supplement their retirement income. 

It is important to take note that the changes in the PLS will start on 1 July 2019, if legislation passes.

In the private sector, we see this government program as a validation of our efforts to promote reverse mortgage as a way for seniors Australians to live a better retirement. The recent expansion further attests to the benefits of tapping home equity to fund needs during retirement age.

What is a Reverse Mortgage?

If you are still not aware, a reverse mortgage will allow you to access the wealth of your home without the need to sell it. Basically, the loan proceeds can be used to improve the standard of living when you stop working.

Relying on Age Pension may not be enough to live a comfortable retirement. Many pensioners don’t have the ready cash for their everyday expenses, but they are living in homes that are valued at hundreds of thousands. Instead of selling it, you can instead convert a percentage of the property to cash that you can use for various needs such as aged care, home renovation, debt consolidation, and even buying a car.

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

Expanded Pension Loans Scheme

The Pension Loans Scheme is quite similar to the reverse mortgage offered by Seniors First because it also uses the home equity in providing a loan for seniors.

With the current expansion, Australian seniors, including self-funded retirees and full-rate pensioners can access the loan up to $17,800 for couples without affecting their age pension entitlements. The loan should be repaid if the pensioner decides to sell the property, move into an aged care facility, or passes away.

Aside from the expansion of the Pension Loans Scheme, Australian seniors may now avail of the additional 14,000 home care packages, and the improved Pension Work Bonus.

These recent changes are commendable because they could help age pensioners improve their lives. As one of the leading providers of reverse mortgages, Seniors First is dedicated to helping Australian seniors enjoy financial freedom in retirement.

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

15
Feb

Can You Lose Your Home with a Reverse Mortgage?

Many Australian seniors still believe in the myth that the bank will take over the property if they put it under reverse mortgage. This is a pure misconception as the borrower will remain the full legal owner of the property, and the lender will only take the mortgage.

It is crucial to really understand how reverse mortgage works so you can be guided on how the product can help you during retirement and avoid losing the property.

How Reverse Mortgage Works

Because of the property boom in the last few decades, many Australian seniors now are considered as “asset rich, but cash poor”. After years of working hard and paying off their mortgages, the value of their homes have surged, but the equity is unlocked and their disposable cash is limited.

[ ALSO READ: Changes in Pension to Boost Interest in Reverse Mortgages ]

A reverse mortgage is a type of loan designed for retirees and pensioners who wish to unlock a part of their home equity so they can have the money they need for aged care fees, home renovation, additional regular income, and more.

Like the usual home loan, a reverse mortgage is also secured by the registered mortgage over the property. The amount of equity that can be unlocked depends on the age and the value of the property.

The interest is ‘capitalised’ -charged back to the loan account – and will compound over time so the balance of the loan will increase unless voluntary payments are made.

The debt, including all interest and fees owed, is repaid to the lender when:

  • The borrower sells the property of their own accord, OR
  • The borrower moves into aged care (not required with some lenders), OR
  • The last surviving borrower dies

Will the Bank Take Over Your Home?

One great advantage of getting a reverse mortgage is that you can choose to stay at your home as long as you want. There is no need to move into an aged care facility or downsize.

As long as the borrower does not ‘default’ under the agreement by breaching key obligations, the bank cannot force a sale of your home.

[ ALSO READ: You Don’t Need to Sell Your Home to Finance Your Retirement ]

Reverse mortgage contracts vary between lenders but common default conditions include failure to pay council rates, keep the property fully insured, and wilful neglect or damage to the house.

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 or post your comments below.

Regards,

Darren

22
Jan

Five Reverse Mortgage Myths Debunked

Reverse mortgages are loans for pensioners and retirees that are designed specifically for older borrowers who are typically ‘asset rich’ but ‘cash poor’. Known variously as ‘senior’s loans’, ‘reverse home loans’, and ‘senior’s finance’, reverse mortgages are the most popular form of home equity release in Australia.

This financial product will allow people from the age of 60 to convert the equity in their property into cash for any worthwhile purpose. No income is required to qualify. Although interest is charged like any loan, the borrower is not required to make repayments (although they can usually make voluntary payments if they wish).

For those who are not well aware of the benefits of reverse mortgage loans and the existing regulatory policies of the Australian government, getting a home equity loan can be perceived as a risky or complicated. Some potential borrowers are also not completely sure about the benefits of getting the loan.

In order to help people address these concerns, Seniors First highlighted five of the most common myths about reverse mortgages and why we should debunk them.

Myth No. 1 – The Bank Will Own Your Home

Many senior Australians still believe that the bank will take over the properties under reverse mortgage. This is not true. The borrowers will retain their full legal ownership of the property and the lender will only take the mortgage.

As long as you don’t breach any key obligation or you do not default on the loan, the bank cannot sell your home. Reverse mortgage agreements vary from one lender to another, but the typical default condition includes damage to the property, willful neglect, non-payment of property insurance, and non-payment of council rates.

Myth No. 2 – Reverse Mortgage Is a Scam

Reverse mortgage loans are among the most heavily regulated financial products in Australia through the Australian Securities and Investments Commission (ASIC). These regulations stipulate crucial borrowers’ protection including the No Negative Equity Guarantee.

[ALSO READ: ASIC Mortgage Broker Review]

The percentage of equity that you can unlock depends on the value of the property and the age of the borrower. Even though lenders have various policies on how they approve the loan. It is crucial to take note that borrowers will still retain full ownership of the home so they can choose to stay in the property as long as they want.

There is no need for repayment, but the interest will be charged back to the loan. It will compound over time so the loan balance may increase unless the borrower makes voluntary payments. The loan, inclusive of all fees and interest, will be repaid once the last surviving borrower dies (for elderly couples), the borrower moves into aged care, or the borrower sells the property on their own preference.

Myth No. 3 – Reverse Mortgage Is a Last Resort Option

As the Australian market develops, reverse mortgage loan products are increasingly sophisticated and becoming more flexible. Hence, it is no longer a last resort option if you need money during retirement. With a reverse mortgage from Seniors First, you can choose to receive the proceeds in:

  • a lump sum
  • a regular income stream
  • cash reserve
  • or a combination of all

Hence, you can design your loan drawdown options according to your preferences and needs. If you need money to upgrade your home to make it more comfortable during your retirement, you can choose to take a lump sum. If your aged care pension will not suffice, you can choose a regular income stream so you can live a more comfortable life.

In the past, lenders offered a range of different interest rate options, including fixed, capped, and variable. However today there are only variable interest rates available for reverse mortgage loans.

Myth No. 4 – Getting a Reverse Mortgage Will Leave No Inheritance for Kids

Among the most common concerns that most retirees have about reverse mortgages involve how the loan will affect their capacity to leave the property to their children.

If you get a reverse mortgage, you can still leave the property to your children once you pass away. However, you will not leave them the whole value of the home. It is crucial to understand how the product works before you sign up because your children will have to repay the loan if they wish to keep the property.

Some lenders offer an option called ‘Protected Equity’, which guarantees that a requested proportion of equity is preserved for beneficiaries (it also means you can’t borrow as much). If you choose a loan without protected equity, then the amount of equity you will have left will be determined by the following factors:

  • The term of the loan/how long you live
  • Interest rate movements
  • Growth rates in the value of your property

Although the interest will accumulate and compound, based on past trends your property should also increase in value over time, offsetting the increasing loan balance.\

Myth No. 5 – Reverse Mortgage Loans Carry Expensive Interest and Fees

As with any type of home mortgage loan, there are also fees in establishing a reverse mortgage – known as set-up costs – that vary depending on the property value, market conditions, interest rates, and loan terms. The fees and interest rates are also calculated according to several factors such as your life expectancy, number of expected years in the property, any existing mortgage balance or liens, the property’s postcode, and your age.

With all the needed details, a reverse mortgage specialist from Seniors First can help you determine the associated fees and exact interest rates for your particular loan.

[ALSO READ: The Advantage of Taking a Reverse Mortgage Now ]

With Seniors First, you may need to set aside $1,500 to $2,000 in total to establish your reverse mortgage loan. This amount includes the main costs such as the lender application fee, government charges, your legal advice fees, and any broker fees. This is an estimate only; you could pay more depending on the circumstances. If you are low on cash, you can usually elect to pay these reverse mortgage costs from the loan proceeds.

Consult a Professional Reverse Mortgage Specialist Today

A reverse mortgage from Seniors First can help you finance the life you want during retirement. If you need more information, or if you want to clarify anything about getting a reverse mortgage, call Seniors First on 1300 745 745. You can also download our FREE GUIDE.

Regards,

Darren

 

20
Dec

The Importance of Having Multiple Sources of Income during Retirement

Research from global wealth and retirement consultant Mercer shows that more than 60% of retirees face a looming crisis of running out of money before they die. Most Australian seniors only have enough savings to last 14 years beyond retirement and may outlive their savings by five years.

So if you don’t have enough savings for your retirement, there’s a high chance that you will find it hard to make ends meet once you stop working. One way to live a comfortable retirement is to obtain multiple sources of income, which will not only sustain your daily expenses but also protect you from different financial risks.

Below are possible income sources that you can establish during retirement:

Income from Super

Superannuation is a primary source of retirement income. One major advantage of super is that you may pay less tax than if you choose to invest your money outside super. There is also no limit on how long you can keep your money in your super fund, and you can access it anytime during retirement. The disadvantage of super is that it is locked away until you are between age 55 and 60.

But take note that several changes on super tax concessions and contributions were implemented on 1 July 2017, which you can read all the details by visiting the website of the Australian Tax Office (ATO).

When it is time to access your super, you can take the money as a lump sum or draw down as a regular income.

Age Pension

Another form of retirement income that you can receive is the pension from the government. Most Australian seniors are now depending on age pension as their primary source of retirement income.

The amount of pension you can receive largely depend on how much income you are receiving from other sources as well as the value of your assets.

[ Related Post:  Age Pension Qualification Age Changes Next Year ]

There are several types of pensions that you may receive depending on your individual circumstances such as:

  • Age pensions
  • Bereavement allowances
  • Carer payments and allowances
  • Disability support
  • Sickness and mobility allowances
  • Widow B pensions
  • Wife pensions

You can learn more about each type of pension including your eligibilities by visiting the Department of Human Services’ Guide to Australian Government payments.

Income from Investments

Aside from superannuation, there are also numerous investment opportunities that you can add to your portfolio to diversify your income. You need to make sure that your money will last for around 20 years or more so it is ideal to find investments that can outpace the inflation rate in Australia.

Common investment vehicles ideal for retirees include equities, investment properties, term deposits, and managed funds.

You must think carefully about your investment strategy, because there is always the risk of losing your retirement income. You can manage the risk by diversifying your investments and be sure to get professional financial advice before you even put your money into any investment vehicle.

Salary from Part-Time Employment

Even during retirement, many Australian seniors are willing to work past age 65. Many are using the opportunity to still get into part-time employment as a way to ease into full retirement.

Some retirees also choose to work part-time as a way to still earn income and continue to grow their super. While other seniors who are not yet qualified to receive age pension can have the opportunity to semi-retire and still receive some income.

In particular, women retirees usually benefit from working past retirement age. Because of lower incomes and career breaks, many Australian women don’t have enough super to sustain a comfortable lifestyle during retirement.

Income from Home Equity or Reverse Mortgage

If you are already 60 years old, you own your home, and need additional income, you can unlock the equity of your home and convert it into lump sum cash or income stream.

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 ]

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.

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

9
Nov

You Don’t Need to Sell Your Home to Finance Your Retirement

By the time you retire and decide to stop working, your income will be greatly affected as well as your lifestyle. You will lose your regular income stream from your salary, and you have to rely on age pension, or if you have managed to invest early on, you can access your superannuation funds.

But not all Australian seniors have managed to save enough money to make sure that their retirement will be comfortable. Based on a survey published by Mortgage Choice, 3 out of 5 Australians feel they don’t have enough money for retirement.

[ RELATED POST: You don’t need to keep working until 70! ]

After years of working hard and paying your mortgage, you may have enough home equity or even achieve full ownership of your home. One common solution for retirees who need additional cash is to sell their homes. Aside from looking for a new place to live, there are also financial and emotional factors that you need to consider before you sell your home outright.

Selling Your Home Will Affect Your Social Security 

Bear in mind that your age pension entitlement will depend on the income you receive (income test) and the value of your assets (assets test). Hence, selling your home will have an effect on the amount of pension you can receive from the government.

Under the assets test, your home and the land it is built on are not counted. If you decide to put your home on the market, the proceeds will be exempted from the assets test for a year, as long as you are planning to buy another home. But take note that the proceeds from the sales of your home will be counted under the income test.

For example, a 68-year-old widow from Sydney decides to sell her home after her husband died and her children moved out. She is expecting to sell her family home for $750,000, buy a smaller apartment for $400,000 and have $350,000 spare cash. After selling her home, the $350,000 was counted on the assets test, which has resulted to lower pension.

You Can Enjoy a More Comfortable Retirement in Your Own Home

Selling your home where you have raised your children and made good memories with your loved ones can be stressful and often difficult for retirees. There’s no place like home, and it will help Australian seniors to spend their retirement years in the comfort of their neighborhood. Some retirees become unhappy after choosing to downsize and live in retirement villages. And once you sell your home, it is gone. It will difficult to find another place or buy your own home again.

In addition, the Australian Government recognises that many Australian seniors prefer to stay in their own homes as long as they can. That is why the government is now improving its aged care system in order to support older Australians to stay at home longer.

Reverse Mortgage as an Alternative to Downsizing

Instead of selling your own home and moving into a smaller apartment and in an unfamiliar neighborhood, you can try getting a reverse mortgage that will allow you to unlock the funds you need and still enjoy the comforts of your own home.

Through a reverse mortgage, you can borrow money using your home as a collateral. You have an option to take the loan as a lump sum, a line of credit, a regular income stream, or combination of these options. One of the advantages of a reverse mortgage is it doesn’t require a specific income to qualify, unlike other loans.

[ RELATED POST: The Advantage of Taking a Reverse Mortgage Now ]

You also don’t need to make repayments while you are still living in your home. You can stay at your home for as long as you want and the only downside is that interest compounds over time. The loan must be paid in full once you sell your home, move to an aged care, or when you pass away.

Consult a Mortgage Broker Today

Selling the family home or taking a reverse mortgage are important concerns that you should not decide on a rush. Be sure to consult a financial adviser who specializes in retirement planning and reverse mortgage products. For expert mortgage advice, call Seniors First on 1300 745 745 or send an email to info@seniorsfirst.com.au.