thekit (thekit) wrote,
thekit
thekit

Reverse Mortgage?

In this week's leader newspaper, a former mayor is calling for moreland seniors to "stop crying poor" and take out a reverse mortgage to live with dignity.

The idea of a reverse mortgage is to take a cash loan against your house, and then make no repayments until you move out and downsize to a retirement home.

http://www.fido.asic.gov.au/fido/fido.nsf/byheadline/Reverse+mortgages?openDocument

I don't know if this is a really good idea. If you take one out at the bottom of a property cycle, you get less money, and then when you want to buy into a smaller property later in the property cycle you could end up short.

If you take one out too early, you can end up short.

Finally, if your house is your only asset, you are basically pawning it.

and what about all the renting pensioners? don't they deserve dignity too?

At the present time, the government is apparently disappointed that the reverse mortgage scheme has few takers. I hope it stays that way.
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