WYNDHAM and Hobsons Bay retirees are being warned to make sure they have all the facts before entering into a reverse mortgage.
Altona MP Lynne Kosky said reverse mortgages, also known as equity release products, appealed to those approaching or living in retirement with property assets and little income.
“Unlike an ordinary mortgage, which allows you to borrow money to buy a house, a reverse mortgage assumes you have already paid your home loan in full,” she said.
“The usual structure of reverse mortgages is no repayment of any sort needs to be made until you either die, sell the house or move out permanently, in which case the lender will be fully repaid.”
Ms Kosky said retirees should be aware of the pitfalls of reverse mortgages, including increased interest on the loan as it progresses and effects they may have on pension entitlements.
Contact Consumer Affairs Victoria on 1300 558 181 for more information.
