Reverse Mortgage: One Suggestion For Your Retirement
By Evelyn Miller
It’s a scary thought. 40 years, the proportion of Australia’s population aged 63 years and over will almost duplicate. With continual expansion in the cost of healthcare and current living expenses, and a decreased ability to rely on government assitance, many Baby Boomers are dreading a need to make substantial downgrades in their lifestyles to fund retirement.
Using a reverse mortgage is the best solution for retirees to tap into their homes, usually one of their biggest assets, for cash.
Also known as ‘Spending the Kids Inheritance’ or ‘SKI-ing’, reverse mortgages authorise retiring homeowners to let go of equity in their homes to fund a standard of living that would be otherwise out of reach.
So how does it work?
Just as the name suggests, a reverse mortgage works similarly to a standard mortgage, only it’s the loaner who pays the homeowner instead of the other way around.
The celebrity of reverse mortgages is set ascension, as our population ages. An obstacle to the take up of reverse mortgages is a strong mentality among retirees to want to leave as much as possible to their children. In almost all the cases, however, kids of retirees would rather see their parents tap into their assets to a high principle of living and general pleasure
a significant treasure to them.
The bank or lender will lend
a percentage (somewhere between 10 and 50 percent depending on the
retiree’s age) of the value of retiree’s home as a lump sum, or regular
revenues to supplement savings or a pension.
The downside? The
interest on the debt can be up to 1 to 2 percent superior than ordinary
home financial loan rates and is gradually added on to the debt over
time. But the profitable informations is that the loan doesn't have
to be paid back until the property is sold.
To take some of
the tension off ageing shoulders, economic institutions are continually
exploring products specifically tailored to help retirees. Meet the
"When you work all of your life, you get to retirement and you want to enjoy what time you've got left," one retiree said.
So whether you dream of a new car, a boat, home renovations or a cruise around
the world, find out from your lender if a reverse mortgage could be the ideal
solution for you.