Reverse Mortgage 

What is a Reverse Mortgage?

The equity in your home can be used to borrow funds through a reverse mortgage.

You may be eligible for up to 20 percent of your home’s value if you’re 60 or older. Adding 1% for every year over 60 is a good guideline. Borrowing minimums vary, but are typically about $10,000.

Monteus lender’s policies and your age may allow you to use the amount borrowed for a:

• regular income stream
• line of credit
• lump sum, or
• combination of these

How a reverse mortgage works

The home is yours and you are not required to make repayments while living there. 

 Over time, the interest charges on the loan will compound, so the amount you borrow will rise. Interest rates are likely to be higher than on a regular home loan.

You repay the loan in full, including interest and fees, when you sell your home.

You may be able to make voluntary repayments sooner if you wish. The loan may also allow you to protect some of your home equity from being eroded. It is advisable to leave enough money for aged care, for example.

What a reverse mortgage costs

The cost of the loan depends on:

• How much you borrow
• The method you select to borrow the funds (for example, a lump-sum loan will cost more in interest over time)
• The interest rate and fees (for example, loan establishment, ongoing fees, valuation)
• How long you have the loan.

Negative equity protection

From 18 September 2012, negative equity protection is available for reverse mortgages. In other words, you can’t owe the lender more than the value of your home (market value or equity).

Don’t worry though, the team at Monteus can be with you to review your reverse mortgage contract, if you took out one before this date. If it doesn’t include negative equity protection, your relationship Manager at Monteus can talk to your lender or help you on what to do.

Equity Home Release 

You can tap into your equity through a ‘home equity release’ and keep living in your home while you do so. If you need money to modify your home, deal with medical costs, or cover living expenses, for example, you can get it through a loan.

You can access equity in your home in several ways:

• Reverse mortgage
• The Government’s Pension Loans Scheme

The amount of money you can get depends on:

• Your Age
• The Value of your home
• the type of equity release

If you are interested in how this can help you then call one of our friendly team members at Monteus to learn more.

Pension Loan Scheme 

Veterans’ Affairs and Services Australia are responsible for managing Government Pension Loans. It allows eligible older Australians to borrow money from the Government on a voluntary basis. Using this as a retirement income supplement may be ideal for you.

If you choose a fortnightly repayment schedule, you can choose how much you repay. You cannot combine your pension and loan payments more than 1.5 times the maximum fortnightly pension rate.

The loan is secured against Australian real estate owned by you or your partner. You can choose how much you offer as security.

Over time, you can borrow only a certain amount of money. The amount of the loan depends on your age and how much you offer as a security. Pension Loans are not paid as a lump sum.

All loan costs and interest must be repaid to the government. Repayments are possible at any time, and payments can be terminated at any time.

For more information about the Pension Loans Scheme, visit Services Australia or the Department of Veterans’ Affairs.