There is no single, easy answer to this question. All of the banks and lenders who provide reverse mortgages in Australia have different rates, fees and product features. The best lender for you will be determined by your specific needs. For example: if you are seeking a 3 year fixed rate, only two lenders in the market offer this option.

Sometimes the cheapest option may not necessarily be the best solution for you. Other factors can come into play: is my lender safe? Will my cash reserve funds always be available for future use? Is the ‘No Negative Equity G’tee’ rock solid? Also, the best lender for your circumstances may be very different from the lender that is best for your friend. It’s a personal thing. In any case it’s very important you get good information and help from an independent source, such as Seniors First.

However, rates are important. There is currently a big difference in the interest rates charged by the banks, and choosing the wrong lender can end up being a very expensive mistake. To check your loan, go here.

If you’re thinking about a reverse mortgage, then your best source of information and assistance will be someone who has completed the SEQUAL accreditation. If they’ve done the course and gained the accreditation, they will have a good understanding of all the issues surrounding these loans and should be able to show you how to save many thousands of dollars in interest.

Indeed, the Mortgage & Finance Association of Australia and all of the SEQUAL lenders now make this a mandatory requirement for any finance brokers who wish to offer reverse mortgage products to consumers. Be sure to ask your broker if they are SEQUAL accredited. If they are NOT, seek assistance elsewhere immediately.

Public seminars can be a highly effective way to get information on reverse mortgages you need. For people in Melbourne considering a reverse mortgage, Seniors First are conducting a series of FREE public forums this week. With representatives from Centrelink and the legal profession attending, this is your opportunity to get all the facts.

The dates and venues are:

ESSENDON - 21st May, 10am. Buckley Bowls Club, Cooper St Essendon.

BULLEEN - 21st May, 2pm. Manningham Club, 1 Thompsons Rd Bulleen.

BOX HILL - 22nd May, 10am. Best Western ‘The Tudor’, 1101 Whitehorse Rd, Box Hill.

BENTLEIGH - 22nd May, 2pm. The Bentleigh Club, Yawla St Bentleigh.

To book your seat please call 1300 745 745.

If you live in Victoria you may recall the ‘Money for Living’ scam of 2005 where several hundred pensioners were fleeced by a former convicted fraudster operating a dodgy equity release scheme. ASIC have now successfully prosecuted the director, Gary O’Neill, and he recently pleaded guilty to two counts of dishonestly using his position as an officer of a company.

This is a great result for ASIC, and yet another illustration to senior consumers of why it is so important to deal with ONLY SEQUAL accredited introducers when seeking to release equity from their homes.

So how did this dodgy scheme work?

It went like this: Money for Living used the celebrity endorsements of Dawn Fraser & the actor Paul Cronin to aggressively advertise their scheme on TV as an alternative to reverse mortgages. Although it purported to release equity from people’s homes, it in fact required that applicant sell their home for less than market value to Money for Living, in return for a guaranteed monthly income and lifetime tenancy. A BIG no-no.

Money for Living failed to disclose the lifetime tenancy agreements to the lenders who took subsequent mortgages over the properties in question, and the whole thing fell over like a house of cards.  At the time of this debacle in 2005, reverse mortgages were only just getting off the ground in Victoria and many people understandably confused this scheme with reverse mortgages and other legitimate forms of equity release, and the Victorian market has subsequently lagged behind the rest of the country as a result.

This scheme was completely different from conventional equity release. For instance, normal reverse mortgages are just loans that:

• Do not involve the sale of a property
• Do not require an change in ownership structure
• Are repaid from the future sale of the property

 Hopefully this successful prosecution will now see Victorians use legitimate forms of equity release in greater numbers.    

Bluestone Equity Release has announced that they will scale back their Australian reverse mortgage offer as a result of the global credit crunch.

Due to the rising cost of funding, Bluestone have withdrawn from the mortgage broker & financial planner channel. Although their award-winning reverse mortgage will still be available via credit unions and other alliance partners, the product will no longer be sold through mortgage brokers due to the higher cost of originating loans through that channel.

Whilst this is disappointing for consumers, as the product level of choice diminishes further, it should hopefully be temporary. Indeed, Bluestone CEO Peter McGuinness has indicated that once global liquidity pressures ease, they will review this decision.  

The Australian Securities & Investments Commission (ASIC) is seeking people to participate in research on reverse mortgages. ASIC is undertaking this research into consumer’s experience of reverse equity, as part of it’s role as the consumer protection regulator.

Participants must live in Victoria and have taken out a reverse mortgage within the last 12 months. The research involves a confidential 40 minute chat. Chant Link & Associates, the agency conducting the research on behalf of ASIC can be contacted on 03 9517 9607.

When establishing a reverse mortage, it is usually a good idea to provision for your future needs within the loan structure as well. In addition to borrowing a lump sum for your immediate needs, you can often also set up a ‘cash reserve’ or ‘line of credit’ that can act as an emergency fund for future use.

In this way you can avoid ‘top up’ fees that the banks will charge if you have to formally request additional funds in future. There is no interest charged on the money in the cash reserve that don’t use.

Cannex, the main rating agency for financial products in Australia,  has just announced the findings of their most recent research into Australian reverse mortgages, and they’ve found only two providers are worthy of their ‘5 star’ superior value rating.  

Although the Cannex research is a handy tool, it should just be one factor among many when choosing your lender. Ultimately,  your choice of lender will be determined by your individual needs; the best lender for you may not necessarily be the best for your friend, for instance.

You should seek out a SEQUAL accredited reverse mortgage broker to help you with this process.

The two lenders to receive 5 star ratings were ABN Amro & Bluestone. For more info on both go here