 Reverse mortgages increase
Reverse mortgages are becoming more common amongst senior Australian's. The choice to take out a reverse mortgage to pay down debt or secure a retirement income is available to outright home owners.
Borrowing against the equity in your home is an option that more senior home owners are making, according to a new study.
However, chief executive of the Senior Australians Equity Release Association of Lenders (SEQUAL) Kevin Conlon said the funding of reverse mortgages was becoming a concern given financial market conditions.
37,500 reverse mortgages were taken out nationwide last calendar year said Deloitte Actuaries and Consultants. Lump sum payments accounted for 97 per cent of drawdowns, with settlements reaching $141 million in 2008, Deloitte said.
Average reverse mortgage are now $66,000 and couples account for almost half of new loans, with the average age of borrowers 74 years.
Deloittes spokesman James Hickey the main motivation for taking out these mortgages were still debt repayment, home improvement and retirement income.
Buying a car was the next most common reason, followed by the need for funds to pay for aged-care services.
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