Here's the most common questions asked about Reverse Mortgages. It's important to us that we answer all your questions so you feel comfortable with any decisions you make.
- How can I have a loan and not have to make any repayments in my lifetime - what's the "catch" - and will you be telling me how I can spend it?
- What are your current interest rates?
- What happens if I die or move into permanent aged care? Will you want your money back straight away, like in a 'fire sale', and who is in charge of selling my house?
- Will my Reverse Mortgage affect my children's and grandchildren's inheritance?
- What about my pension or social security benefits? Will these be affected by my Reverse Mortgage?
- What if my home is already mortgaged?
- Can I repay my Reverse Mortgage loan at any time?
- How and when do I pay this loan back?
- Why don't I have to make any repayments? How does that work?
- How does a Reverse Mortgage make my life easier?
- How much can be released?
- Can my Reverse Mortgage loan ever exceed the value of my property?
- Can I borrow more later on if I need?
- Do I have a choice in the type of interest rate with a Reverse Mortgage?
- So I have the choice of a lump sum or monthly income plans?
- How does the monthly income option work?
- How does the flexible draw down option work?
- Are there any restrictions on the flexible draw down option?
- Do you have any fees or charges?
- So there are no monthly fees or charges?
- Can I ever be forced to leave my home?
- What if I move?
- What if I choose to sell my property or move into permanent care?
- What if my spouse dies?
- How will my Reverse Mortgage loan be discharged?
- Does this mean my family misses out on their inheritance?
- How does the protected equity option work?
- Are there any restrictions as to what I can do with the money?
- Are there any conditions I must adhere to during the lifetime of my Reverse Mortgage?
- What if there is someone else living in my home?
- What is the Reverse Mortgage Customer Enquiries line?
How can I have a loan and not have to make any repayments in my lifetime - what's the "catch" - and will you be telling me how I can spend it?
There is no "catch". The principles of any reverse mortgage are that you are not required to make any repayments until you move out of the home on a permanent basis, e.g. into permanent aged care, or die. Interest is accrued over the length of your loan, but is added to the final repayment amount. As for how you spend it, that is entirely up to you.
What are your current interest rates?
As you are aware, interest rates fluctuate from day to day and are guided by the Reserve Bank, but we are determined to keep rates as competitive as possible. Your financial adviser will have a copy of the current, low reverse mortgage interest rates at the time of your application. You should also take into account the fact that there are NO ONGOING FEES OR CHARGES when comparing the interest rates to other reverse mortgage providers. Please refer to the Comparison Rate table for the current rates.
What happens if I die or move into permanent aged care? Will you want your money back straight away, like in a 'fire sale', and who is in charge of selling my house?
Under the terms of your Reverse Mortgage, you have a 12- month period within which to sell the security property and repay your loan. In the event of your death, the sale of your property is left entirely in the hands of the Executor of your Will, or your family, depending on the details as set out in your Will. Once the property is sold, the loan and any interest accrued is repaid and the balance is divided according to the terms of your Will. Alternatively, your family could choose to keep the property and simply repay the loan. It is your choice.
Will my Reverse Mortgage affect my children's and grandchildren's inheritance?
Yes, it may, if you have decided that the proceeds from the sale of your property will be divided among your family. This is why we strongly emphasise the importance of discussing your decision to take out a Reverse Mortgage with all your family members and any other beneficiaries. Remember, you have the option to protect up to 25% of your equity as well.
What about my pension or social security benefits? Will these be affected by my Reverse Mortgage?
They may, which is why we urge you to talk directly to Centrelink, who will advise you accordingly.
What if my home is already mortgaged?
You must clear all debts against your property first. The outstanding balance of an existing mortgage can be repaid by your Reverse Mortgage loan.
Can I repay my Reverse Mortgage loan at any time?
Yes. However, Early Repayment Fees are applicable if you voluntarily repay completely within the first ten years and you may incur Break Fees if you voluntarily repay a fixed rate loan early.
How and when do I pay this loan back?
No repayment or interest is due during the term of your Reverse Mortgage. The balance of your loan is required to be repaid within 12 months of one of the following events occurring: 1) the borrower - or in the case of joint borrowers, the last surviving borrower - permanently moves out; or, 2) the death of the borrower or, in the case of joint borrowers, the death of the last surviving and inhabiting borrower. You are free to repay the loan at any time, but you need to check whether any early repayment or break fees apply.
Why don't I have to make any repayments? How does that work?
The amount you have borrowed and any interest and fees are capitalised back into your reverse mortgage. This means that instead of making monthly repayments, these interest charges and fees are simply added to your loan total. The final amount does not have to be repaid until one of the events listed above occurs. As there are no ongoing account fees, these are not capitalised monthly, adding to the amount owed, as with some other reverse mortgage products.
How does a Reverse Mortgage make my life easier?
It allows you the financial freedom to do a range of things you may not be currently able to do and keep enjoying making more life memories. This could include increasing your monthly disposable income, renovating or re-painting your home, purchasing a new car, paying your grandchildren's university fees, or simply easing your day-to-day living.
How much can be released?
Unlike many of the similar reverse mortgage products currently available on the Australian market, Reverse Mortgage has NO MAXIMUM LIMIT. The amount you borrow through Reverse Mortgage is entirely up to you but is dependent on the independently assessed value of your property and the age of the youngest borrower. The minimum amount you can borrow is $10,000.
Can my Reverse Mortgage loan ever exceed the value of my property?
No. Reverse Mortgage provides a No Negative Equity Guarantee. Therefore, the amount of your loan will NEVER exceed the value of your property as long as you comply with the standard loan terms.
Can I borrow more later on if I need?
Yes. You may apply for further advances at any time. Further advances are subject to the same, original lending criteria and conditions.
Do I have a choice in the type of interest rate with Reverse Mortgage?
Yes. You have a choice between a Variable Interest Rate and a Fixed Interest Rate. This also allows you to choose a number of ways in which you can have your loan funded to you.
So I have the choice of a lump sum or monthly income plans?
Yes - there is a combination to suit your needs - you can receive your loan as a lump sum, as a monthly income or flexible drawdown. And you can choose between fixed and variable rates, depending on the structure of your loan. You also have the choice of Fixed Rate periods of five (5), ten (10, fifteen (15), twenty(20) years of Life.
How does the monthly income option work?
Using the How Much Can I borrow Calculator is the best first step. Put in the number of years you want to draw down money over; then decide whether you want the payments to be equal from year to year or if you'd like them to increase by 2.5% each year. The maximum will appear, then you can enter the amount required
How does the flexible drawdown option work?
You can decide how much you would like to borrow at the time the loan is set up. It is then up to you to decide when you want to draw your money, with the only condition being that it must be a minimum of $1,000 each time.
Are there any restrictions on the flexible drawdown option?
The initial limit is agreed at the time of the loan. The limit may be reduced if the independently assessed value of your property falls. This independent valuation will be carried out every three years, at no cost to you.
Do you have any fees or charges?
Naturally, interest is accrued monthly on your loan and you will need to pay the independent valuer for the initial property valuation plus your own legal fees. Apart from that we have no ongoing fees and charges. However, should you decide to voluntarily repay your loan in the first 5 years you will incur a repayment fee. Fixed rate loans may incur Break Fees, while if you change the structure of your loan there will be an administration fee of $250.
So there are no monthly fees or charges?
That's right. We do not have any ongoing monthly fees or charges. The only instances in which you will incur a fee are; if you decide to voluntarily repay your loan in the first 5 years, or if you voluntarily repay a fixed rate loan during its term or if you request a change to your loan.
Can I ever be forced to leave my home?
No, you can continue to live in your property for as long as you like, as long as you carry out essential maintenance and maintain the homeowners' insurance policy.
What if I move?
As long as you meet with our criteria at the time of your move, you may be able to transfer your loan to your new home. You will need to discuss things with us in advance of any move.
What if I choose to sell my property or move into permanent care?
You are not restricted and you can sell at any time. Once your home has been sold, your reverse mortgage will be discharged at settlement and the balance of funds from the sale given back to you.
What if my spouse dies?
You can continue to reside in your home for the remainder of your life or until you decide to permanently move, assuming the property is also in your name.
So how will my Reverse Mortgage loan be discharged?
Your loan is repaid after the sale of your property, leaving the remainder of the equity in your home at your or your estate's disposal. Beneficiaries of your estate may also choose to keep the property and refinance the balance owing.
Does this mean my family misses out on their inheritance?
No. Once the property is sold and the amount owing on your loan has been paid out, you remain free to distribute any remaining sale money to whomever and however you choose. This amount will depend on how much you have borrowed and is affected by housing price growth, the duration of your plan and market interest rates. We highly recommend however, that you discuss your decision to choose a reverse mortgage product with family members and any other beneficiaries.
How does the protected equity option work?
You can decide that up to 25% of the equity in your home is to be protected and so when it is sold that percentage is returned to you before repaying the loan. It will reduce the amount you can borrow, but there is no fee for this option and it does mean that you will definitely have some equity remaining when the loan is repaid.
Are there any restrictions as to what I can do with the money?
No. You can spend it however you want.
Are there any conditions I must adhere to during the lifetime of my Reverse Mortgage?
Yes. The borrower(s) must live in the home. It is a condition that your home is properly maintained during the term of your loan as this affects its market value. We will arrange and pay for a non-intrusive property valuation every three (3) years. The property needs to be insured by you and you must continue to pay all rates due.
What if there is someone else living in my home?
Friends and family are entitled to live with you but as they are not the nominated owner or borrower they can have no rights or interest in your property.
Credit is provided by Reverse Mortgage Services Pty Ltd ABN 87 114 594 080. The information contained in this website has been prepared without taking into account the objectives, financial situation and needs of any particular individual or couple. For this reason, you should - before acting on any of the information contained in this website - consider the appropriateness of the information with regard to your individual objectives, financial situation or needs. Suncorp recommends that all applicants seek appropriate professional, financial and taxation advice
