A reverse mortgage is like a normal home loan that has been designed for the needs of people in retirement. Importantly, you can continue to own and live in your home for as long as you wish while enjoying the benefits of the community, social networks and family memories it provides.
With a reverse mortgage no regular repayments are required, as the debt is repaid from the future sale of the property. You can also benefit from any potential increase in the property value.
How does a reverse mortgage work?
Reverse mortgages are very flexible. You can use the funds for a number of worthwhile purposes such as debt consolidation, living expenses, home improvements, travel, medical costs, aged care or purchasing a new car.
You can also choose to receive your reverse mortgage loan amount as a lump sum, as regular advances, as a cash reserve facility (similar to a ‘line of credit’), or a combination of all three.How are costs calculated?
Reverse mortgage interest is calculated on the daily balance outstanding and added monthly to your loan account. Heartland only offers a variable interest rate, allowing you to make voluntary repayments. These can be made to your loan partially or in full at any time without extra penalty charges, adding further flexibility and reducing the balance and interest charged.
Once you move permanently from your home, the total interest charged, together with the amounts drawn, will be payable. There are fees and charges for setting up the loan, and it is dependent on what options you select. Heartland’s fees can be found on our Documents and forms page.
Reverse mortgage benefits
Here are some of the benefits of taking out a reverse mortgage.
Continue to enjoy the comforts of your home and live there for as long as you choose.
Remain the owner of your home, benefitting from any potential increase in property value.
The funds can be used for almost anything that helps you live a more comfortable retirement.
You – and your estate – are protected by a No Negative Equity Guarantee*
*Subject to complying with the terms and conditions of the Heartland Reverse Mortgage, you will not owe more than the net sale proceeds of your home and you can keep your home for as long as you choose. There is no assurance that property values will increase over time, and property values may also decline.
Reverse mortgage considerations
There are some things you may want to consider when deciding to take out a reverse mortgage.
- Your loan balance increases over time as interest accrues monthly and regular repayments are not made.
- The amount of equity you can draw down is determined by your age, property value, and other loan approval criteria.
- Drawing funds from your property now can reduce what you could potentially access later on.
- Variable interest rates mean that there will be changes to what you are charged over time.