ANZ offers a wide range of mortgage loan options, including first-time homebuyer loans, investment mortgages, reverse mortgages and low-documentation mortgage loans. Heartland Bank offers reverse mortgages under its own name. SBS Bank continues to offer its Advance Loan. There may be other lenders; this report focuses only on banks.
For many, the fact that big banks were leaving the reverse mortgage market was not seen as something negative for the sector. In the same way that people compare banks before applying for a mortgage mortgage, personal loan or credit card, you should compare the rates available from different reverse mortgage lenders. And if you plan to leave your property to your children, understand that taking out a reverse mortgage could substantially reduce your inheritance. Interest rates on reverse mortgages are usually higher than those offered on new mortgages, mainly because they are usually repaid at the end of the loan rather than through regular repayments over the life of the loan.
Reverse mortgages usually come with a lifetime occupancy guarantee, which gives borrowers the right to live in their home for as long as they want. Reverse mortgages also posed risks for consumers and could be especially complex for “older, inexperienced customers,” the bank said. Unlike a traditional mortgage loan where you are required to make ongoing payments, a reverse mortgage allows borrowers to continue living in their own homes without making any repayments. ANZ does not offer reverse mortgages or SMSF real estate loans designed specifically for retail investors, but it does lend to self-managed funds through its trading arm, as do all major banks.
A reverse mortgage can help you access your home savings to improve your lifestyle and well-being in retirement, without needing to sell. Traditional bank reverse mortgages were not always aligned with the long-term housing and income needs of Australian retirees and often did not provide true sufficiency and certainty of retirement funding. This was due to a number of reasons, notably a focus on short-term consumption of home equity and a sales culture aimed at the neediest customers, so reverse mortgage financing became a “last resort” option rather than part of a retirement financing plan to long term. The lender gets your money back (plus interest) when your home is sold, which usually happens when you receive full-time care or die, or the last person named on the reverse mortgage document permanently leaves the property.
Using a reverse mortgage allows you to increase your retirement funds because you don't have to make regular payments (although most providers allow you to do so if you want). You or your estate will not be asked to cover any deficits that may arise if your home sells for less than the amount owed on your reverse mortgage. Interest rates on reverse mortgages are usually higher than those offered on new mortgages, mainly because they are usually repaid in the end. Despite the name, reverse mortgages are not the exact opposite of regular mortgage loans; there are a little more of them.