Market Advices


Reverse Mortgages/Senior Equity Loans

Reverse Mortgages/Senior Equity Loans

Reverse mortgages are intended for people who find themselves later in their life owning their home (or most of it) but requiring more cash. A reverse mortgage allows homeowners 60 years of age and over to borrow against the value of their home and access their equity without having to sell the property.

The reverse mortgage finance could be for any specific purpose, such as a holiday, new car, caravan or modifications to your home, or it could merely be put in place to provide additional money to supplement your income/pension. It may alleviate the need to sell your home, and buy a smaller/cheaper one, just to obtain access to some additional funds.

Reverse Mortgages require no repayments during the term of the loan. Instead the interest and other charges on the loan are added (capitalised) to the loan balance. Reverse mortgage loans generally require no repayments until all borrowers permanently vacate the property. i.e:

  • when you leave and move into care accommodation;
  • when you sell the home; or
  • upon the death of the last surviving property owner

When any of the above events occur the loan becomes repayable

Funds obtained via a reverse mortgage can be taken as:

  • a single lump sum,
  • a series of instalments, or
  • A combination of the above two options

A risk with reverse mortgages is that the amount of the loan may increase to a point where it is more than the value of your home. This is called ‘negative equity’. Fortunately, most reputable lenders offer a ‘no negative equity guarantee’ so even in a disastrous property market you may never owe more than the value of your home.

At WeLend we can assist you in choosing the most suitable reverse mortgage option as well as the most suitable reverse mortgage structure.

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