ASIC releases reverse mortgage guide

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Tony D’Aloisio chairman of ASICand Paul Clitheroe chairman of the Australian Government Financial Literacy Board, last week launched Thinking of using the equity in your home? A new independent guide to reverse mortgages and other equity release products.ASIC’s new guide is designed to assist people who are considering whether an equity release product is right for their individual circumstances.
‘When someone considers using the equity in their home, it’s a big step involving what is probably their most valuable asset. While equity release products can give you benefits they can also have significant risks’, said Mr D’Aloisio. ‘Our research shows that people find it difficult to understand these products. One of the big challenges is how to estimate the long-term cost of reverse mortgages and ensure there is enough equity left to fund future needs. We’re also concerned that people are sometimes encouraged to borrow more money than they actually need, ultimately at a greater cost to them,’ Mr D’Aloisio said.

‘If you need additional money now, an equity release product is only one of the many available options. Using your home equity now could significantly limit your choices if you need money in the future,’ Mr Clitheroe said.

Reverse Mortgage Watch supports ASIC’s initiative. You can download the free report here or call 1300 300 630 to request a free copy in the mail.