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Reverse mortgages 'just not good business', argues broker

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Australian Broker | 07 Jun 2013, 08:00 AM Agree 0
Reverse mortgages can go tragically sour - but they can also provide a solid financial step-up when used correctly. We interview to brokers with completely polarizing viewpoints
  • PeterT | 07 Jun 2013, 11:11 AM Agree 0
    I think reverse mortgages can be applied well or badly. The outcome depends on the planning and implementation. That said, it's a tricky topic with a lot of room for error and if it goes badly it won't reflect well on the broker. With so much A grade business available, I'm happy to leave this to others.
  • Greg R | 07 Jun 2013, 11:32 AM Agree 0
    A serious discussion would have been preferred to one where a provider is trying to promote a new (old) product. The reversion product is based on capital growth, otherwise there is no basis for this product for investors, hence the restrictions of the Homesafe product in terms of postcode and property types. This will be no different.

    With the no negative equity guarantee, reverse mortgage lenders are extremely unlikely to be lending where there may even be a possibility of this occuring, so the emotive scare words above carries little in the way of accuracy.

    A reverse mortgage is not a perfect solution but it is often a better solution than alternatives for seniors. Many do not want to sell and downsize (even if they could live in the same area), the dollar costs and emotional upheaval is often too great to warrant. Unlikely or unable to be able to get back into the paid workforce, not in a position or too proud to ask for help from adult children, the alternatives are continuing tightening their belts or be forced into a sale if they have existing unpaid debts.

    If they just want an extra $20k to $50k, a reverse mortgage may well be a far better alternative for their lifestyle and well being than anything else.

    Good to see another option for seniors but it would carry greater weight if the marketing strategy was not based on criticizing another product.
  • Rastafarian | 07 Jun 2013, 01:47 PM Agree 0
    Do what is in the best interests of the client. The people I've seen and set up with reverse Mortgages get all the information prior to applying, I do charts based on current growth and on zero growth so they can be fully aware of where they will be in the future or what will be left for any inheritance. I've found the ones who are really against the elderly having equity release , are those who think they should be inheriting it, not see it going to the lender years down the track, or 80% anyway.
    Personally I would rather see my parents reverse mortgage their home , get the money to use now, stay in the home they are used to, and have some fun while they still can if they want, I don't want or need to inherit their home, they worked for it, and it's up to them to decide if they want to use the equity or not.
    Well informed client , full transparency, and good service, make the RM a good product to have in your tool kit.
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