(01/12/2023)
Reverse Mortgages NSW: Loan Scenario of the Week
Terrence (aged 84) lives in his property on Sydneys Upper North Shore. He has lived there for 30 years and loves his home and his lifestyle. He wants to continue living here and his lifestyle as long as possible.
He has a Reverse Mortgage with a lender who is no longer actively lending and has a current interest rate of 9.35% per annum. The outstanding balance is approximately $455,000. He receives $3,000 per month to “top up” his pension. This extra funding from his Reverse Mortgage has meant he has had a very enjoyable lifestyle of the last 7 years since getting his Reverse Mortgage. Some months he does not use all the funds and he just transfers excess funds back to his Reverse Mortgage account.
Terrence wants to refinance his current Reverse Mortgage as he will save 0.8% per annum at current interest rate differentials. The new Reverse Mortgage has the same features as the old product but, will save Terrence thousands of dollars a year in interest.
Terrence will stay in his property as long as possible. He wants to use some funds to paint some walls, replace carpet and install a chair lift for the stairs.
The “top up” fund he receives monthly enables Terrence to have a very high standard of living. His lifestyle in retirement is basically like having $60,000 per annum after tax to spend. The likely limit will allow him another 10 years of this standard of living. If he still needs funds at this time he can apply for an increase in his limit.
(Names, locations, amounts, & other personal details have been changed to protect the client’s identity.)
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