Have you ever thought about how you plan to spend your retirement? Broke and unhappy, right? Of course not! Just because your working life has come to an end, does not mean you should settle for an inferior lifestyle. No-one should have to suffer through a terrible retirement because they didn’t know of better options, and that is where this guide comes in – to help guide you to better decisions in retirement by equipping you with more knowledge than you had before.
Although there are many ways to get to a financial Plan B, the reverse mortgage is one of the safest and most predictable ways to navigate your retirement finances. Don’t think that you are about to step into just another loan – the reverse mortgage is VASTLY different! Here’s why.
Use your assets to your advantage
Always dreamt of redoing your house, going on that dream holiday, or just needing to wrap up some financial odds and ends? If you are 62 years of age or older, legally own your house and live in it permanently, the reverse home-loan could be exactly what you have needed. Likely, your house is probably your biggest asset, so why not use it to its full potential? Rather than taking out a regular loan, and putting yourself back into the mainstream debt spiral, a reverse home loan turns a percentage of your house’s value into cash, for you to use as you like, as long as you remain compliant with certain terms and conditions of the loan.
What to bear in mind
When you apply for a reverse home loan, your lender will take certain things into consideration, such as where your house is situated, what its general condition is, and whether you still owe money on your original home loan. The fact that you don’t have to repay anything immediately can be very convenient but do remember that you are still dealing with a loan at the end of the day, and that loans bring interest. If you reach the end of your loan term and find yourself unable to pay back what you owe, the house against which the loan was taken out will be sold to recover the costs. As with any loan, make sure that you really need one, and more importantly, that you will be able to cope with its demands before committing.
How does repayment work?
The long-term nature of a reverse home loan means that you need not pay back anything until the end of the term. If you choose to move from the bonded house, you will be liable to pay the balance of what you owe. Remember that the function of a reverse home loan is a backup in times of need. It should be treated with the same respect as any other loan, as you will still be liable for any amount owing to your lender, even though the terms are far more relaxed than those of a regular loan.
Leave a Reply