Offering a reverse mortgage can help brokers grow and diversify, according to a leading reverse mortgage provider.
Under the new budget anyone over the age of 65 will be able to take out a reverse mortgage worth up to $11,799 per year.
Previously, this was only available for part-time pensioners, but this will be extended to full-time pensioners.
The number of people taking up a reverse mortgage has increased over the last few years, according to one provider. Opening up to even more pensioners will see an even greater increase.
Andrew Ford from Heartland Seniors Finance says although reverse mortgages are still a niche, any broker with the right training and skill can offer them.
He added, “In terms of brokers being able to provide reverse mortgages, any broker with the appropriate training and skills can offer them and Heartland provides considerable training and the beauty of reverse mortgages is simplicity. Being so heavily regulated it has a very prescribed process which makes it very easy.
“The majority of brokers haven’t touched a reverse mortgage. Reverse mortgages are a niche product, but it is a growing market. What I’d say is reverse mortgages is a great way to grow and diversify your business and really add value to your customers.”
Despite a ‘majority’ of brokers not writing up reverse mortgages, Ford says the broker channel still accounts for most of the business.
He added, “Seventy percent of Heartland’s business comes from brokers and that’s a channel we’re absolutely committed to. As well as providing information and education and tools to help grow the market and help more retirees live a better retirement. I guess that’s why what we really do support out of this budget is the recognition of the benefits reverse mortgages can provide.”
While most of treasurer Scott Morrison’s budget was deemed ‘disappointing’, with no mention of housing supply or affordability, the expansion of the pension loan scheme is seen as good news.
Ford said, “My view is that it will positive for the reserve mortgages sector and for Heartland. It will increase awareness, which is probably the biggest competition we have right now, a lack of awareness. It will also provide some legitimacy for the product as a use and retirement to help people live a better retirement.
“Approximately 20,000 Australians turn 65 every month, so the growth from this demographic is large and is going to continue. So the broadening of this scheme will help. More seniors will be able to apply for a pension under the pension loan scheme which is great.”
Ford also expanded on the different options available for pensioners who need some extra funding, as well as the options Heartland offer.
“What we offer is a much more flexible option,” he said. “Our product offers the ability to draw down upfront, via regular advance or have funds aside for future needs in effectively a line of credit, where a pension loan scheme only offers one draw down option which is an age pension supplement really, a top up.
“Our customers come to us tend to have a need up front, whether it’s to be refinancing an existing mortgage, whether they want to renovate their home, whether it’s to travel or consolidate debt or medical expenses, upgrade a car, there’s a whole variety of reasons. And so they tend to need a lump sum up front.”
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