A new study by Royal Bank of Scotland has found that a third of all reverse mortgage funds are used for home renovations.
“Forget over-the-top purchases, these are asset-rich/cash-poor people simply trying to make ends meet,” says RBS Reverse Mortgages, head of reverse mortgages, Martin Lynch. More than 32% used the payments for renovations, while 18% used the money for income, 15% for a car purchase, 8% for travel, 6% for financially helping family, 4.2% for a rainy day facility and 2.41% for medical bills.
About 98% of reverse mortgagees surveyed would recommend a reverse mortgage to family and friends.
Australia’s reverse mortgage industry is worth $2.5 billion, according to the May 2009 Deloitte SEQUAL Reverse Mortgage Study. It is currently growing at 23%. It is estimated that by 2020, 18% of Australians will be aged over 65.
According to the study the average value of reverse mortgage is $60,000.