Reverse Mortgages in Australia
Mariner moves into reverse mortgages
George Liondis
A growing cohort of older Australians without adequate savings has spurred Mariner Financial to join the burgeoning reverse mortgage market, offering retirees the opportunity to borrow up to $1 million against the value of their home.
The move by Mariner, which has traditionally focussed on pension and bond-related products, was inspired by the growing swell of older Australians who were looking for ways to help fund their retirement, general manager George Lucas said.
Reverse mortgages are a type of equity release product which allow retirees to borrow against the value of their home. The amount of money they borrow is paid back to the lender usually when the borrower sells the property and moves to a retirement village, or when their children sell the property after the borrower dies.
Mariner would allow people over 60 to borrow between 15 and 45 per cent of the value of their home, depending on their age, to a maximum of $1 million.
The money can be borrowed as a lump sum, but does not have to be paid back until after retirees sell their home.
“Most people have been told to spend their lives paying off their homes. Particularly if you are a low income earner, all of your wealth is caught up in that house. This is a way of accessing that wealth,” Lucas said.
While the reverse mortgage market is only in its infancy, experts are forecasting rapid growth as an expanding demographic of retires looks to uphold its lifestyle in retirement.
A recent Trowbridge Deloitte report predicted the reverse mortgage market, currently worth $1 billion, would grow to at least $7 billion in the next couple of years.
A typical client for reverse mortgage providers would be someone in their 60s or 70s, who has little saved in superannuation and a home worth in the vicinity of $500,000-$600,000, according to Lucas.
“If you are looking at Sydney, that is a lot of clients. A lot of people in their 60s or 70s don’t have a lot of money in super. There is also a younger group coming up which has higher consumption expectations in retirement,” Lucas said.
Source: Money Management
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