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West Pennant Hills: (02) 9481 0428
Ermington: (02) 9898 1155
Auburn: (02) 9749 1055

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Reverse vs Standard Mortgages

A reverse mortgage is repaid when the borrower dies, moves from the residence, or the property is sold.

The Benefits of a Reverse Mortgage

A reverse mortgage increases your income in retirement. A reverse mortgage increases income, without increasing monthly payments, and allows you to stay in your home.

Key Points

You retain ownership of your home. The reverse mortgage is a charge upon your home. A reverse mortgage is a “non-recourse” loan. If the loan amount is more than the value of your home at the time when you want to pay out your loan, you never pay more than the value of the home. This is also known as “no negative equity guarantee”.

You can use the proceeds to pay off your existing mortgage.

The reverse mortgage is repaid when the borrower dies, moves from the residence, or the property is sold.

The Negative’s of a Reverse Mortgage

Fees, which can include the interest rate, loan origination fee, mortgage insurance fee, valuation fee, and various other costs, are high when compared with a standard loan. Costs are normally rolled into the loan.

There is a requirement to pay back the loan, if you permanently leave the home. eg to go to a Nursing home/Retirement Village. If you need to enter a Nursing Home, the loan would become payable. Namely, the timing of the Sale will not totally be within your control and you may need to sell when the market is depressed.

A reverse mortgage impacts upon the value of your Estate, as it will reduce the equity in your home, which will leave less for your Beneficiaries.

Prior to considering a Reverse Mortgage you should speak to the major Beneficiaries of your Estate, as they may be prepared to advance funds to maintain the value of their inheritance.

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Hills District

  • Level 1, Suite 2, 10 Castle Hill Road
    WEST PENNANT HILLS NSW 2125
  • (02) 9481 0428
  • P.O. Box 302
    ERMINGTON NSW 1700

Parramatta District

  • Suite 4, 8 Betty Cuthbert Avenue
    ERMINGTON NSW 2115
  • (02) 9898 1155
  • P.O. Box 302
    ERMINGTON NSW 1700

Auburn

  • 1 Mary Street
    AUBURN NSW 2144
  • (02) 9749 1055
  • P.O. Box 76
    AUBURN NSW 1835

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