- The loan can be for a lump sum or for a regular amount e.g. $5000 each year. The maximum loan is determined by age. Bank documents must be signed, and they hand over the title to the bank.
- Funds can be used for any purpose. Renovate the house, help with living expenses, buy a boat, take a yearly holiday or to pay out existing loans: any purpose whatsoever.
- No repayments. Ever. However if they would like to pay some back, they can.
- They don’t need an income to apply. Anyone 60 and over, with a property can apply.
- They retain full ownership of the property until it is sold and retain all the benefits of any growth in the value of the property.
- Because it is a loan and not income, the money doesn’t affect the pension. (Of course if the money is used to buy income producing assets then that may affect the pension – but always seek advice from Centrelink or an accountant.)
- The property will be increasing in value at a far greater rate than the interest can accumulate. And if this is a worry, there are some lenders who will make guarantees about this. Speak to your “Sequal” accredited mortgage broker.
- The bank gets the title to the house. My parents hated this idea, and never wanted a mortgage again but they are coming around now they see the benefits.
- Interest rates are higher than standard loans. Some banks let you fix the rate; at others the rate is variable. Variations in policy too mean some banks lend more than others.
- There is interest on the interest. Unavoidable I’m afraid.
- What can be borrowed is based on age of the youngest person in the house. Somewhere between 25% and 40% of the value will be allowed.
- Since the GFC only a few banks now do these loans. And you must go through a Sequal accredited mortgage broker.
Collections: Mortgages
Share