Seniors - Boscia Financial Group

“Everything that happens is a small part of our journey.
We can choose to be passive or we can be proactive and overcome our fears, set our own goals and do the best to reach them. We always have a choice.” – Giorgio Pautrie

You can have a significant impact on your finances, relationships, and the quality of your life in retirement. If you are over 60, utilising equity is one option available to you to ensure the dreams of a life time are realised.

According to a 2015 Deloitte and Sequal report, there are 40,000 reverse mortgages on issue in Australia, amounting to $3.6 billion worth of loans. The average loan size for a reverse mortgage is $92,000, an increase from $86,000 in 2013 and $84,000 in 2012. Whilst these loan sizes are not considered “large” in size, the relief they can provide Australians by funding the release of debt, realise late life dreams, utilised for aged care and supporting the cost of remaining in your own home in old age; comes at a time when your income may just not support it.

You don’t need to travel to us; we can meet with you at your home, or any other preferred location to discuss your Reverse Mortgage options. We can get to know you better and have a fuller understanding of your needs.

We believe if a Reverse Mortgage is a good idea for you; it’s a brilliant one.

Discover the power of your options when we will take the time to consider:

Possible changes in your future income or expenses
Open dialogue and encouragement to have the involvement of family if that’s your choice
Plans to enter into Aged Care
Your decision in regards to the value of the estate you wish to remain for your beneficiaries.
Effects on your Centrelink or other Government payments

When would you use a reverse mortgage?

The Productivity Commission’s 2015 report found that the number one reason for accessing a reverse mortgage was to be able to afford aged care or other healthcare costs. This is largely so that people could grow older in their own home. Reverse Mortgage or Seniors Home Equity Release Loan can be offered against the equity in your residential, holiday or investment home.

Reverse Mortgages – You use the equity in your home to borrow money

Home reversion schemes – You sell a proportion of the equity in your home.

Using your home equity may be suitable if you:

You need a small amount each year to supplement your income and you can afford to do this for many years
A lump sum for home maintenance or renovations so you can stay in your home
Funds are required for a critical need e.g. medical treatment
You would like a loan to secure aged care accommodation until you sell your home
You would like to purchase a car
Consolidate debt such as credit cards
Help family or the grandchildren

Reverse mortgages are regaining popularity

The market for reverse mortgages is growing once again, and older Australians have the option to add to their retirement income by accessing home equity.

Reverse mortgages declined in popularity during the GFC, but the Productivity Commission’s 2015 report into ageing has put them back in the spotlight. Research suggests that 83% of older Australians strongly prefer to ‘age in place’. See the Treasury, 2015 Intergenerational report (March 2015).

Reverse mortgages help older Australians achieve a “modest” retirement.

According to the government’s Productivity Commission 2015 report “Housing Decisions of Older Australians, many older Australians could be accessing their home equity to improve their retirement lifestyle, but aren’t. Older Australians prefer to save their pension, despite 40% actually spending less than the “modest” standard of living of paying for daily living needs and basic activities.

Of the many pensioners who are currently not achieving a modest standard of retirement, 96% could use their home equity to change this, for the rest of their lives, without ever going into negative equity. What’s more, they probably wouldn’t lose their pension, as Deloitte reports[i] that a reverse mortgage has very little, if any, impact on pension entitlements.

[i] Deloitte Media Release – “More sources emerging for retiring Australians to fund retirement.” Annual Reverse Mortgage Report

Who owns your home?

You own your home. The bank lends you money in a lump sum or income stream using the property as security, up to a portion of the value of the home’s value.

You always remain the legal owner of your home – legal rights protect you so that you can never owe the bank more than a certain portion of your house’s value. Obviously, interest compounds reducing how much you own of your home. As property prices increase or decrease this can effect the balance owed, accordingly.

You can always protect your equity by nominating a percentage of your home’s value to remain available for your estate – so your borrowing capacity can only be up to that nominated amount.

What are the repayments?

Repayments and fees are capitalised on the loan, so the borrower is not required to make any repayments of the principal or interest.

The loan is only repaid when you sell your house, move into residential aged care, or pass away.

You can make repayments any time you like. Making repayments means there would be a greater part of the value of your home available in your estate when your house is sold.

Retirement

There is no longer a fixed retirement age in Australia. The age at which any individual retires may reflect choices and constraints.

The Age Pension age is currently 65, rising to 65½ in July 2017 and then in stages to 67 in July 2023. If current Government proposals are accepted, the Age Pension age will be 70 by 2035. This applies to both men and women.

60 is the new 40! If you would like to tap into the capital growth you have accumulated for the things that you need or must do now, don’t hesitate to email us.

We can work together on your goals.