Some lenders run special promotions from time to time, waiving their set up costs in whole or in part. It’s a good idea to ask your broker to check for these specials so that you can minimise your upfront costs.

If you are unsure if you qualify, or you would like to find out which lenders are currently waiving fees, go here.  

Many people don’t realise that these days it’s usually possible to pay an accommodation bond for entry into aged care without selling the family home. A few select lenders such as Bluestone & ABN Amro allow the  person going into care to borrow against their property via a reverse mortgage to pay for the accommodation bond.

The house can then be rented out,  if structured correctly, without any impact on the government pension. For more information on reverse mortgages for accommodation bonds and aged care go here. 

One of the most popular ways to borrow money via a reverse mortgages these days is a ‘line of credit’. This is where you establish a pre-approved limit, but you only draw on the funds as you need them.

This is great for ‘rainy days’ and emergencies, and is usually a much more cost effective way to access your equity.

As an example, if you were 65 years of age and owned a house worth $400,000, you could access up to $80,000 as a reverse mortgage. With some leenders, you could choose to establish all of this as a line of credit. Although the $80,000 is always available you are not contractually obliged to use any of it, and you will ONLY be charged interest on what you do use.  For more info, check out this Equity Release Guide.

With the recent spate of interest rate increases, many people who took reverse mortgages through the major banks several years ago are now paying well in excess of 10%.

Fortunately, there are many other lenders who currently offer much cheaper rates, and crucially, no monthly fees. Now is a good time to investigate these options if you think you are paying too much. You might be surprised to learn how much more you could pay over time if you’re stuck with the wrong lender.

As an example, if you borrowed $100,000 as a reverse mortgage loan, based on the current difference in the rates charged by the banks, you would pay over $100,000 more in interest and fees over 20 years with one lender, compared to one of the cheaper alternatives.

Are you paying too much? Check your loan here