(02/06/2023)
Reverse Mortgages NSW: Loan Scenario of the Week
Victoria (aged 76) lives in her home in the Eastern suburbs of Sydney. She has lived here for 31 years. The property is a house that has she has converted into a duplex.
She owns both halves of the duplex and she has the other half tenanted with a long-term tenant. She currently has a mortgage of approximately $210,000 outstanding. She does receive $46,000 per annum rent less agents fees. Victoria separated from her partner 5 years ago which resulted in her having to pay him her superannuation and other investments which has resulted in her having less income than she had planned. Due to her separation this property is her only source of income and has also left her with a mortgage.
Her rental income is not enough to cover her living costs and the mortgage repayment. Currently the interest rate is fixed below 3% but, it will revert to a higher rate shortly. Thus, the mortgage repayment will increase. She already has seen her savings dwindling over the past couple of years and fears this will only worsen when her fixed interest rate finishes.
By refinancing the current mortgage to a Reverse Mortgage, she will free up her cash flow which enables her to meet her normal living expenses with her rental income and keep her investment property. She can still make payments or just pay the interest if she wishes but has no obligation too. She would also like to have a credit line available to draw down over the next ten years for one off unexpected expenses or discretionary spending such as travel or car replacement.
In summary, Victoria does not have sufficient income to cover her investment property mortgage payments. She has been using up her savings to live and make the loan payments and is consistently going backwards. She wants to refinance this to a Reverse Mortgage to reduce her cash outflows, which will reduce her stress and enable her to continue to enjoy her retirement.
(Names, locations, amounts, & other personal details have been changed to protect the client’s identity.)
Reverse Mortgages NSW: Loan Scenario of the Week (23/06/2023)
Reverse Mortgages NSW: Loan Scenario of the Week (26/05/2023)
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