Money is available to senior citizens in Australia almost instantly thanks to a few existing financial mechanisms. Lately a certain product has grown pretty popular among elder families in the country. It is called reverse mortgage. Similar to most loan schemes, this one also has a number of variable and conditions. This is not to say that it is in any way bad or questionable. All we mean is that you should explore your options and then make the final decision. You should seek to use an Australian reverse mortgage calculator as it is going to be of great help. We will focus on its components and properties in the following piece but first let us clarify a few of the aspects of the reverse mortgage in general.
Receiving a loan at an age over 60 can be quite the challenging endeavour for seniors as banks rarely agree to loan them money for an extended period of time. If you are such a person, however, you can get a reverse mortgage which is basically a home loan with some details. You receive a sum but in turn you are to give up a portion of your home equity. This mechanism is pretty useful to people with valuable assets in Australia but with a low retirement fund. Some factors that really matter when applying for such a loan and for which the Australian reverse mortgage calculator will be of great help are:
All of these will determine what size of a loan you will qualify for along with the amount of money you will owe at the end of the period. But when does that period end? Well, this is one thing that an Australian reverse mortgage calculator cannot tell you because the loan is paid in full when the property is sold. There is one other way for the debt to be repaid but it happens when the last borrower passes away.
So let us summarize what exactly a reverse mortgage allows you to do. You loan money in exchange of some home equity. There are no monthly payments but the full debt is repaid when you sell your property. The interest compounds which means that your debt will definitely grow a lot as time passes by. The longer you wait to sell your property, the less home equity you will retain. Fortunately this last part is covered and presented to you by the Australian reverse mortgage calculator. If it doesn’t work for you then you can let go of the whole idea.
Seeking information from professional realtors is a must in your case. Along with that your banker will be able to provide some help as well. Use the services of experts and ask them about an Australian reverse mortgage calculator. Thanks to it you will be able to see the whole picture when you wish to get such a home loan. For more convenience and in the name of time saving, you can access such a calculator online yourself. Whatever the case, these calculators will definitely give you a head start when you start your dialogue with professionals regarding a reverse mortgage. Here is the information needed.
ASIC is the government agency in Australia which regulates such transactions and mechanisms. We suggest that you use their Australian reverse mortgage calculator as it will definitely provide you with sufficient information.
The first thing you need to input is your age. It matters the most as you will not be able to qualify for a reverse mortgage if you are younger than 60. Additionally the older you are, the larger the loan you are entitled to. Typically a person at the age of 60 will only be able to get a loan corresponding to about 15% of their home value. In case you are married, you need to also add the gender and age of your spouse. This is because they inherit your debt in case anything happens with you. Your name is optional as the calculator doesn’t care about the identity of the user. The home value box, however, is a very important one and if you aren’t sure how much your home is worth, you should consult with your real estate agent.
The Australian reverse mortgage calculator will automatically suggest the annual increase/decrease of your home value. Click the blue button in the right bottom corner and move on to the next page.
What you see here is pretty important as it will determine the final sum you will owe to your lenders. This is information you must get in detail from your bank or financial institution at which you are applying for a reverse mortgage. The typical interest rate is between 8% and 10%. You will also be asked to enter an ongoing fee and an establishment fee but you should ask the right people for those numbers as they vary.
Next you are asked to decide between two options – whether you’d like to receive a lump sum once or have some cash paid to you in regular monthly installments. Most folks decide that a lump sum is the better option as you are free to allocate it immediately. With monthly payments you do get a financial injection regularly but due to inflation and devaluation of money over time, you are better off spending a larger sum on something right now.
The next page of the Australian reverse mortgage calculator will finalize your plan and will give you a projection on what you owe and what you get to keep after a certain period of time. This estimation tells you what will happen to your home equity and debt in the next up to 15 years. If you borrow 10% of your home value in the form of cash, you will likely owe about 25% of your home value as debt after 15 years because of the compounding interest. It is completely up to you to decide whether such an offer works well for you or not.