AAP | NineMSN | July 24, 2012
The deterioration of superannuation accounts as a result of the global financial crisis has prompted a growing number of seniors to use the equity in their home to help fund their retirement.
Mortgage provider Loan Market says there are now more than 40,000 senior Australians who hold a reverse mortgage, otherwise known as seniors finance equity release loans, which have grown by 22 per cent during the past two years.
Reverse mortgages allow people aged 63 and over to borrow from the equity in their home or investment property, but with no repayments required until the property is sold.
“It is becoming more popular in the post global financial crisis environment,” Loan Market corporate spokesman Paul Smith said in a statement.
Seniors can borrow up to $425,000 under a reverse mortgage, and pay an interest rate that is slightly higher than the standard variable interest rate.
“Unlike the traditional mortgage, there are no criteria to obtain a reverse mortgage such as income criteria,” Mr Smith said, adding that the loan can be used for any purpose such as an overseas holiday or to buy a car.