Reverse Mortgages NSW: Loan Scenario of the Week
Mr C (80) and Mrs C (74) have lived in their home on the Northern Beaches for over 50 years and inherited the house from Mr C’s Parents. They have a current Reverse Mortgage with a lender for $350,000 that they took out in early 2018. They have used this to supplement their income $3500 per month, buy new motor vehicles and do renovations on the house.
Due to difficult family circumstances the C’s have had to raise one of their granddaughters who is now at university. They took out the original Reverse Mortgages with a view to reviewing things in 4.5 to 5 years’ time. Having used most of their previous loan facility they are now refinancing their Reverse Mortgages so they can continue to support their granddaughter and stay living where they are for the foreseeable future. Since the original mortgage the value of the house has increased significantly from $2.5 million to $4 million. On top of this increase in the property value they can borrow 4% more of the total value then they could when the original loan was taken out due to their 4-year increase in age. They are now increasing their loan facility to $1 million dollars to ensure they can continue to support their granddaughter and maintain their lifestyle.
When they did the original Reverse Mortgages they were considering selling and moving to the Mid North Coast. This would have resulted in their granddaughter having to live in Sydney and start university without their support. If they had sold and bought another property up north for $1.5million they would have had considerable funds to invest which would have affected their pensions (even after stamp duty and agents’ costs etc). The Reverse Mortgage has allowed them to stay in a lovely home, support their granddaughter, and continue receiving the full pension. Furthermore, the increase in their properties value has been around 4 times greater than the Reverse Mortgage has cost. They fully expect the new Reverse Mortgages to last them the rest of their lives and they will still leave a large inheritance to their family.
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Reverse Mortgages NSW: Loan Scenario of the Week (21/10/22)
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