Questions and Answers

Frequently asked questions on Seniors Finance, Reverse Mortgage / Home Equity Release Loans – if you have any other queries after reading the following then please call us on 1800 424 266

What is a reverse mortgage /home equity release loan?

It is a special type of loan that allows you to use the equity or assets value that you have built up in your home, and then turn this equity into cash to use for whatever reason you want – i.e. holiday, living expenses, new car, renovations, help your family, health costs

Who can qualify?

If you own your own home, holiday home or investment property and you are over 55 years of age then you would qualifier for a reverse mortgage.

What happens to the Title of my home?

The Title of you home will stay in your name.

Do I have to make any repayment on the loan?

No, you do not have to make any repayments for the life of this loan

Can I make voluntary payments?

Yes, you can make voluntary repayment if you wish to do this.

When does this loan have to be repaid ?

It is a “lifetime loan”. The loan is repaid when you choose to sell your home, or when the last surviving borrower passes away.

How much can I borrow?

The amount you can borrow depends on the age of the youngest borrow against the valuation of your property. As the age of the youngest borrower increases you can also “top-up” the loan, (borrow more money). The loan percentage on the value of the property starts at 15% at the age of 60 years and increase with age until it reached 45% at age 90. (a lower percentage applies if borrower is 55 = 10% ) The value of the property generally increases over this period as well.

What if I have a mortgage on the property now –

If the amount you presently owe on a mortgage is less than what you can borrow, then this present mortgage will be paid. This will form part of the reverse mortgage.

Do I always have to be living in my home?

No, if your were sick and had to move in with your family or into a nursing home, or even go travelling for a few years you can choose to have your family look after your home or even rent the home out. This is your choice.

How can I default on a reverse mortgage?

As this is a “lifetime loan with no repayments”, you may think how I can default.
It is part of the loan agreement that you maintain insurance on the home, and if you did not do this then it would mean the loan could go into default.

Will a reverse mortgage effect my pension?

This will depend on your circumstances and what you require the money for or when you intend to use the money. In general terms, if you are on full pension and have little or no other income or assets, and require the money, to say buy a car, do some renovation, go for a holiday, spend the money for personal reasons then it does not generally affect your pension. It is a recommendation that you seek advice from the Centrelink office on your personal situation when going into a reverse mortgage.

Why do I need a lawyer?

It is a requirement of some lender that you seek legal advice, when your loan has been approved and you receive your reverse mortgage/equity release documents. This is for independent legal advice so that they can explain to you what the documents are about They will answer any legal questions on these documents that you may have so that you are comfortable and understand this mortgage agreement as this is a lifetime loan.

Do I have a choice on variable or fixed rates?

Yes, you do. You can choose variable rate options or fixed rates. "Indicative rates”: for variable9.05%, for fixed rate from 8.85 % to 9.19% or you can have a "lifetime" fixed rate at 8.85% (please check with us to see what suits your situation the best)

Can I pay the loan back?

You can make voluntary partial or full repayment of the loan whenever you wish.

Does it cost me anything to pay the loan back?

There are No fees if the loan is repaid for health reason, or if you have to move into a retirement home or village.

(If the loan is in a fixed rate period then you may have a small fee to break this fixed rate period. If you have chosen a variable rate then there would be no break costs. These details will be in your legal mortgage documents according to what type loan you choose)

What does a No Negative Equity Pledge mean?

The No negative Equity Pledge ensures that you (or your estate) will not have to pay any shortfall difference between the sale price of your home and the outstanding balance owed when the home is sold. (see your contract)

If you kept borrowing as you aged and lived for a very long time and for some reason the loan was greater than the sale price of the property it means that you, or your estate never have to pay back more than the sale price of the property.

Can I have a "Flexible re-draw" or a "Cash Reserve" facility put in place?

Yes, you can have this option - this is where you can choose to take your maximum amount as your limit. Then draw down the amount that you require, when you require it. Interest is charged on the balance owing.(No interest is charged on the cash reserve) You can also have options of a Lump sum, monthly payments and any balance left in a redraw. These types of loans can also have fixed or variable rates.
I have my home on a Rural acres property, do you lend on this? Yes, you can have an equity release / reverse mortgage if this is your own home on acreage.

My Family Trust / Company owns the home I live in, can I have an equity release.

Yes, there is a loan that assist you here, postcodes do apply - please ask for further information.

I have some pension income but require more income to meet my expenses, can I have monthly payments and will it effect my pension or not?

Yes , you can have an equity release loan with monthly payments, say if you needed an extra $600 per month, in general terms as this is coming from your exempt asset via your own home - paid to monthly then it is not taken into account for Pension or Social Security Income - it is used by some self-funded retirees access income. You can check this with your Centrelink officer.

As I get Older and I need more money, can I do this?

- The equity release / reverse mortgage loan is on age and property valuation. As your home increases in value, or as the youngest borrow get older you can increase the size of the loan.

Channel Direct Home Loans is here to assist you whatever your

situation...just call us on 1800 424 266