No income is required to qualify, however, credit providers are required by law to lend money responsibly, so not everyone will be able to obtain a reverse mortgage.
A reverse mortgage is a type of loan that has been specifically designed for seniors over the age of 62 years to borrow money using the equity in their home as security. The loan can be taken as a lump sum (for a holiday, renovation, boat, accommodation bond for aged care, etc), a regular income stream, a line of credit, or a combination of all these options.
Interest is charged like any other loan, except the borrower is not required to make repayments while they live in their home – the interest compounds over time and is added to the loan balance. The borrower remains the owner of their house and can stay in it for as long as they wish.
The loan must be repaid in full (including interest and fees) when:-
- the borrower sells their home,
- they move into permanent aged care,
- the last surviving borrower passes away.
A reverse mortgage is not the same as a house reversion scheme, where a portion of the house is sold.
The family need to understand the impact on the reduced “inheritance”.
It will not be cheap, fees will apply, it will take time, legal advice should be obtained, and expect numerous conditions. Always seek help and involve the family.