More baby boomers looking into financing their retirement are turning to home equities by reversing mortgages and borrowing money against their homes, data from Senior Australians Equity Release show.
The research reveals that the size of the reverse mortgage market went up in the past 10 years to $3.6bn, but its growth has slowed since the global financial crunch.
While these ways may help Australian seniors to fund their desired lifestyle without needing to sell their properties, experts warn of a change in interest rates. These loans have a typical annual interest of 1% to 2% but don’t have to be repaid until they die or sell.
However, lenders can only give borrowers a loan amount within the home’s price. Borrowers also cannot be booted even if house values go down. This means that a 65-year-old borrower can only avail 15% of his home’s value, while an 85-year-old can have 45%.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan