home equity loan

A home equity loan or reverse mortgage loan is a lifetime loan that allows you to obtain access into the equity in your home or investment property - No repayments are needed whilst you live in your home and you can live there for as long as you choose.

The hom eequity loan is only repayable when you choose not to live in your home anymore. Want to find out more about a home equity or reverse mortgage loan ?

A home equity loan or reverse mortgage is a loan against the equity in the home that provides cash advances, but requires no payments during the term of the loan. Since there are no monthly payments during the life of the loan, the balance grows larger yet at the same time your property is increasing in value over the years. This may not always be the case in short periods eg after a boom in property prices but when thing settle down property prices will climb again

The loan is not due and payable until the borrower no longer occupies the home as a principal residence, e.g. the last surviving borrower sells, moves out permanently or passes away.

You must be at least 60 and own your own home or have sufficient equity in order to qualify for a reverse mortgage. There are no income or credit requirements to qualify. Based on the amount of benefit, which you qualify for, you may be eligible for a reverse mortgage even if you still owe money on your first mortgage.

The money from a home equity loan or reverse mortgage can be used for anything: daily living expenses; home repairs and home improvements; medical bills and prescription drugs; pay-off of existing debts; education; travel; long-term health care; retirement and estate tax planning; and other needs you may have.

The moeny from home equity loan are available as a lump sum, fixed monthly payments for as long as you live in the property, a line of credit; or a combination of these options.

The amount of benefit that you will qualify for, will depend on your age at the time you apply for the loan, the type of home equity loan you choose, the value of your home, current interest rates, and for some products, where you live. As a general rule, the older you are and the greater your equity, the larger the reverse mortgage benefit will be.

The costs associated with getting a reverse mortgage are similar to those with a conventional mortgage, such as the origination fee, appraisal and inspection fees, title policy, mortgage insurance and other normal closing costs. With a reverse mortgage, all of these costs can be financed as part of the mortgage. some lenders have waived these fees to assist you further.

The loan writers job is to educate you about home equity loans, to inform you about other alternative options available to you given your situation, and to assist you in determining which particular reverse mortgage product would best fit your needs if you elect to get a home equity loan. This is at no cost to the borrower and can be done in person or over the telephone.

Questions & Answers on home equity loans

Q. Who are home equity loans designed for?
A. They are designed for homeowners at least 60 years of age with equity in their homes.

Q. Can a home equity loan be taken out if there is already a conventional mortgage on the home?
A. Yes, but any existing mortgages must be paid off at closing. The proceeds from the reverse mortgage may be used for that purpose.

Q. What types of homes won't qualify for a home equity loan?
A. Generally vacation homes or other secondary residences, mobile or manufactured homes not attached to a permanent foundation, rental properties of more than four units and homes on leased lands do not qualify.

Q. How do the monies from a reverse mortgage affect Social Security, Medicare or pension benefits?
A. We can not provide any information regarding this please contact centrelink to speak with the FIS officer they are trained to deal with this and can help you but I think you will be pleasently surprised

Q. What is due when the loan is repaid?
A. any cash advances you have received plus accumulated interest.

Q. Does the lender take the house?
A. This is a misconception; a reverse mortgage is merely a loan against the property. The title remains in your name and the lender is only repaid the loan balance or the home value which ever is less.

Q. If there are no payments, what are my responsibilities as a borrower with a reverse mortgage?
A. You are required to pay your property taxes, keep current property insurance in place, maintain the home, and notify the lender if you will be away from the property for an extended period.

Q. When does the loan become due and payable?
A. The loan is due and payable when the borrower sells the property, permanently leaves the home, or passes away. In the case of a couple, it is the second to move out or die that triggers repayment. Until these events take place you live in the home and make no payments to the lender.

A You are limited in the amount you borrow to see that this does not happen and your house is increasing in value all the time. please visit the Senior Australians Equity Release Association of Lenders (SEQUAL) there you will find many of the answers you need.

Q. Do I or my heirs have to sell the property to repay the loan?
A. No, repayment can be accomplished by a refinancing of the existing reverse mortgage by a conventional mortgage loan.

If you have any more questions please contact us. Phone 1300 85 75 85

Home equity loan helps 72 year old widower supplement her pension by $312.50 per month

Story
Beryl is a 72 year old widower on the pension of $13,000 p.a. Her husband sadly passed away 8 years ago and she has no family close by to help. She hires help to mow the lawns, maintain the garden and conduct other minor house repairs. Beryl’s hot water system is unreliable, constantly requires repairing and it’s time to replace it and she’s tired of cold showers. The fortnightly pension was inadequate to sustain such expenses.

Solution
A lawn bowls friend recommended that Beryl speak with her local Centrelink FIS Officer for suggestions on supplementing her pension.

Beryl met with her local Centrelink FIS officer who provided independent information on a number of equity release providers, including Bluestone’s EQUITYtap. After researching her options she decided to meet with an Accredited Bluestone Introducer who ran through a couple of loan scenarios with her. Considering the interest rate is fixed for the life of the loan, Beryl was able to ascertain exactly how much the loan debt would be after 10 years.

In addition to the certainty a fixed rate of interest provides, Beryl also chose Bluestone’s EQUITYtap because of the flexibility of funds advance options. She was able to elect that funds be advanced as a combination of a lump sum and monthly instalments over a 10 year period.

Bluestone’s EQUITYtap enabled Beryl to cover upfront costs such as the installation of a new hot water system and repairs to the roof and allowed her to supplement her monthly pension by $312.50 per month, covering costs for a handy man around the house and other incidentals.

Beryl now has a sense of financial security and peace of mind and is proud that she is able to maintain the condition of her home.

Questions & Answers on home equity loans