If you are like most people, you have heard of reverse mortgages, but may not understand a lot about them or the companies that offer that particular kind of mortgage. It is necessary to learn a little bit about them if you are going to consider them as an option because otherwise you may find yourself extremely confused. All reverse mortgages are regulated by the ASIC (Australian Securities and Investment Commission) and allows you many benefits.
The company you select cannot offer legal advice though many people think they should. However, they want you to take out that loan, so they are slightly biased. You should hire legal counsel to go over the loan, explain everything to you and make sure it is the option that works best for your needs. In fact, the company will require you to be advised by your solicitor before you can sign the contract to make sure you’re fully aware of the obligations. You may also be required to have a financial planner or accountant sign an Independent Financial Advice Certificate, which is also for your protection.
Your Money Forecast
While no one can tell you exactly what you’ll get and why, the company you select should offer a forecast of your future’s net equity, which is calculated through online calculators. They will be able to project how much equity you have based on various interest rates and estimates of capital growth. In most cases, you’ll receive a forecast at three intervals, including 15, 10 and 5-year options.
While loans are not secured, and the money you receive from them is not guaranteed, you do have a No-Negative Equity Guarantee, which is part of the National Consumer Protection Act 2009 regulations. This means that you can’t owe more than your home is worth when the loan is to be repaid, no matter how long the loan has been in place. This can act as a safety net for you when you move or to your family members when you pass away.
If you want to use a finance broker or credit advisor, you’ll need to make sure they are accredited with SEQUAL and follow their codes. That broker or advisor will also have to be accredited with the financing lender. Financial institutions may require different accreditation courses than SEQUAL, so they’ll need to ensure they meet all requirements.
Learning the facts about reverse mortgage companies will help you decide if this loan option is the right choice for you.
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