Reverse Mortgage
Have you applied for this mortgage and been happy/unhappy with it? Would like some feed back on the pros and cons.
Without actual figures, it's hard to judge. With more and more older people going for this option, this is an excellent topic to pursue.
What disempowers seniors is that they usually don't have the large sums available for satisfactory independent advice and they usually don't have a network to help them.
A definite 'con' of reverse mortgages is that the banks have already shown a lack of ethics by encouraging consumers to borrow too much, to take an example. That should scream buyer beware. But what if the vulnerable targets are between a rock and a hard place, to whom do they go for adequate impartial advice that is relevant to them and they can afford?
Again, those should be crucial matters for the new Age Discrimination Commissioner, but she is doubtless beavering away on finding jobs on company boards for ageing middle class women careerists and she doesn't have enough resources, ho hum.
However there may be some who read these threads with the expertise to venture informed opinions.
Have never applied for one
It scares the heck out of me to be honest. Similarly borrowing from the Money Lenders seen on tele. a few weeks back and paying one hundred percent interest.
I suppose if absolutely nothing to eat borrowing $100 and paying back $200 is an option to stay alive but these would be last resorts before I would use Reverse Mortgage or Money Lenders. I suppose nobody can actually say Never to anything as there are extenuating circumstances in life of course. Another topic but also if a person goes into a Nursing Home with any money there is little hope of much being left.
There really is a lot to contend with as the years catch up on us and I pray everyone can stay fit and healthy enough to do whatever we want in our older age even if we all have pain of some type or another with some having to accept a lot more than others.
Has there ever been a time in history when so many bull sharks, both government and entrepreneur alike, were circling seniors to strip them of the assets they have beavered for over a lifetime?
It isn't so long ago that a person could retire in the family home for the remainder of a lifetime and carry out regular maintenance. Inflated council rates alone are making it a challenge for many.
It scares me to death too Phyl and I sincerely hope I never have to use it but I can see corporate lenders rubbing their hands together in glee, because they know that big money will be made here now and in the future.
Once we get old and retire doesn't mean we aren't still up for a good time and with almost everyone you speak to these days are taking wonderful overseas trips away, I can imagine someone saying 'Why not me?' And the bottom line? - the nest egg is almost gone and all that's left is the house. They see a reverse mortgage as the only way to solve their cash flow problem, to take that overseas holiday or fix up the house.
I would like to see more protection for seniors entering into this arrangement, something that says they completely understand the circumstances before they sign on the dotted line.
While reverse mortgages may not be suitable for everyone there may be a case for a single person who owns their own home and is getting older to try one.
After all there are no pockets in shrouds.
How very true Fwed , and the greedy sods can't get it you once you are wearing one
Sorry Tadpole, not true because the Greens are trying to reintroduce death duties. So yes, they will steal from the dead.
(While I have always criticised the late Joh Bjelke Peterson, nonetheless he did number of very good things for which he is due credit and abolishing death duties in Qld was one of them.)
I would suggest that any senior citizen have a very close look at the deal before signing up for a reverse mortgage. Firstly you should take into consideration the actual amount approved as against the amount you actually need. Next, have a good look at the interest rate. You will find that the 2 or 3 specialists are charging the highest rates available. The biggest thing to remember is that the mortgagor has total overriding control of your home. On your demise, your will executor will have no say in the sale of your home. It will be treated like a mortgagee sale with your beneficieries having no legal imput into the sale process or the price. Take care; I would not touch a reverse mortgage.
Me neither or either Ken Innes :)
My thanks for the replies. I read The Age and other articles on reverse mortgages. Thanks. I have come to the conclusion 'NO' I won't take it out. Anyone want to buy a badly sunburnt 26 year old car and a small house that needs a live-in maintenance person?
There is something else to consider here. What happens if you have taken out a reverse mortgage or similar product, the bank has gouged out their piece, and one needs to go into aged care?
The govt is apparently planning to take the family home as payment, according to the article to which I'll link below.
So it seems to me, getting old is just becoming too complicated, and a dashed nuisance all round.
[OLDER Australians will be stripped of their security if the federal government pushes ahead with an "undisguised grab'' of their homes as part of its aged care reforms, says a pensioners group.
The proposed overhaul of the sector will force older Australians to sell their homes and remove their security, Paul Versteege of the Combined Pensioners and Superannuants Association (CPSA) will tell its annual conference in Sydney today.
"This undisguised grab for older Australians' home equity is unfair,'' Mr Versteege said in his speech.
"It takes away, whether it's in one fell swoop or gradually, the security older Australians have worked all their lives for.'' ]
katie777,
I have written at length on this site about the direction the government is taking on policy affecting seniors, including self-supporting retirees. Most are not interested until it directly affects them personally, an instance being the refusal of needed medication on the NHS. I will not return to that except to observe that none of the established parties regard seniors as a voting bloc of any consequence and it shows.
What is less clear is why any government would take decisions that are at odds with obvious good policy that has often stood the test of time, which government itself acknowledges also saves money. An example of that is the benefits for the senior and the taxpayer of ensuring independence in the home for as long as possible. A cynic might think that the entrepreneurs aiming to take chunks out of the assets of the elderly have the ear of government.
Regarding home maintenance, there are some NGOs and voluntary groups who provide a cheap service.
Car - although necessary for the mobility of seniors, the cost of maintaining and running a vehicle is quickly going beyond the reaches of many. That and the roads are rapidly becoming unfriendly places for anyone but the boy (and girl!) bullies whose egos exceed their driving abilities.
Seggie. Keep your old car. It's a necessity whilst one can drive. Better the old cars with metal around you than all the plastic.
Do not under any circumstances, do the reverse mortgage. I've seen people borrow on their houses and have been left with almost nothing.
It's almost as if the government want the oldies dead. They seem to be trying to scare people. The elderly have enough to contend with, without being told that if you need to go into a nursing home, either you do the reverse mortgage, sell your house or pay if you have money.
Maybe one of these days, they'll offer a pill to send you to eternal sleep.
It certainly doesn't give you a warm glow, thinking of the government.
Many I've spoken to think as I do, that it's truly disgusting. Some have even been in tears.
Katie,
This article from The Age newspaper has good information,
http://theage.domain.com.au/real-estate-news/reverse-mortgage-pros-and-cons-20110603-1fjcl.html
I would go through all of the possible alternatives with friends before I did it because it is to me the very last resort.
It is a timely subject for many though: what to do when the money isn't enough or there is a need for large expenditures.
I would rent out a room to a (young) boarder before I would do it. Or sell up at my leisure and buy anew. That alternative has traps for the unwary too, such as the costs of turnover and moving somewhere with less amenity and the unlikelihood of buying something established that suits an older person -easy care, easy access, wider corridors, shower/bath access and so on. Those have values too.
What concerns me is that:
- seniors do not usually get adequate professional advice (legal, accountancy, Centrelink [SIS officer] and health) before taking such a decision; and,
- it is yet another area where the brochures and other information provided by government and others are so simplistic, and diplomatic to the lending stakeholders that they are absolutely worthless. Why do we pay so many bureaucrats for that? Oh well, buyer beware and pay for independent advice or suffer the consequences.