No substance to reverse mortgage myths

mortgage property executive director

18 September 2006
| By Darin Tyson-Chan |

The member organisation governing the reverse mortgage sector feels retirees are sacrificing their standard of living because they are ruling out the use of reverse mortgage products for fear of being swindled.

In response to this negative sentiment, the Senior Australian Equity Release Association of Lenders (SEQUAL) has tried to dispel some of the common myths surrounding these products.

One of the common misconceptions held by consumers is retirees will lose ownership of their homes. SEQUAL has refuted this, stating the retiree maintains ownership of the property and the property is used only as an asset to secure the loan.

A second myth about reverse mortgages is that families must sell the property once the retiree has passed away.

According to SEQUAL, families need not worry about this outcome, as most products of this kind usually give people the option of simply paying back the loan without selling the property.

A further fear held by consumers is that by taking out a reverse mortgage, retirees will lose their equity and any subsequent capital growth in their homes.

However, SEQUAL says that while this scenario is a possibility, if the loan is drawn down in a prudent manner, people can actually increase the equity in their home when prices rise.

SEQUAL executive director Kieren Dell said: “There are many myths surrounding reverse mortgages ... but provided you deal with a reputable lender who is a member of SEQUAL, fear of these myths should not stop retirees from using these products in the right circumstances.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

2 days 3 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

6 days 9 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 4 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 6 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

5 days 7 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

4 days 10 hours ago