Reverse Mortgage Information

Mariner Retirement, as befits a financial services company geared primarily toward pensioners and those preparing for that time of life, has considered those special needs while designing their website and their products.

For example, the portion of the website describing the amount of money that can be borrowed through their reverse mortgage does not dwell on expensive possibilities such as extended overseas vacations, but instead emphasises future financial needs that older individuals may face sooner rather than later, and which may require funding through the equity in their home, such as health needs, accommodation bonds for aged care facilities, estate planning, and Centrelink benefits. This is a level of responsibility not always seen in reverse mortgage providers and is entirely to their credit.

As another example, Mariner Retirement, unlike some reverse mortgage providers, allows the borrowers’ children or other people to move into the home, so long as the borrowers themselves also remain on the property.

Mariner Retirement offers a flexible financial product, with the option of variable or fixed interest rates, for a term of one to twenty years, or over the life of the loan. Although no mention is made on the website of funds being available as a lump sum, they can be accessed as either a steady income stream or as an available drawdown line of credit, ready if needed.

Currently Mariner Retirement’s minimum loan amount is $10,000. The LVR varies between 15% and 50%, depending upon the age of the borrower, from 60 years to 95. Up to 20% of the equity in the home can be protected against repayment of the loan as a legacy for one’s beneficiaries.

Mariner Retirement offers a portability option should the borrower move home; however, if the move involves a downsize, and the balance of the loan at the time of the move is greater than the maximum amount that can be borrowed on the new house, the difference must be repaid at that time.

Mariner Retirement requires the property to be revalued every five years, with a cost varying from $300 to $500 or more, depending upon the value of the home. The borrower must pay for the valuation whether the loan is actually taken or not. Future valuations through the life of the loan not only allow the borrower to keep tabs on the equity position, but also provides an opportunity to arrange for additional borrowing should it be desirable.

There are no ongoing loan fees nor an application fee. Through 31 March 2008, a special offer from Mariner Retirement waives the costs of legal, settlement, and documentation fees, a savings of more than $1,000 to the borrower.

Mariner Retirement is a member of Senior Australians Equity Release Association of Lenders (SEQUAL), with full adherence to their code of ethics and business practices, including a strong no negative equity guarantee. All prospective borrowers are required to obtain independent legal and financial advice prior to taking the loan.

Prospective borrowers should be aware that Mariner Retirement’s financial products are not available over all of Australia. Their availability in any particular area can be ascertained by calling 1300 009 963.

Another selection of quality reverse mortgage products is offerred by Vision Equity Living, one of Australia’s premier non-bank lenders. As proof of their product’s quality, in January 2008, Money magazine awarded Vision Equity Living a silver medal in the Best Reverse Mortgage (Non-Bank) category of their annual competition, and the product received a four-star rating from CANNEX in their inaugural October 2007 ratings report for the industry.

As a full member of Senior Australians Equity Release Association of Lenders (SEQUAL), Vision Equity Release must adhere to a strict code of ethics and behaviour designed to protect prospective borrowers. Amongst other requirements, this includes ensuring prospective borrowers acquire independent legal and financial advice prior to entering into any loan, and the guarantee of no negative equity is ironclad against almost any action short of fraud or willful negligence on the part of the borrower.

The requirement that borrowers obtain independent financial advice is designed to ensure that Centrelink benefits are not jeopardised by the income generated by a reverse mortgage, and that the borrowers’ long-term financial needs are protected.

Vision Equity Living offers two basic reverse mortgage products, the Lifestyle Plan and the Freedom Plan. These two products are then subdivided according to whether an income stream, lump sum, or combination payout is preferred. The lump sum plan may carry a fixed or variable interest rate; however, the income stream, payable weekly, fortnightly, or monthly, over a set number of years between five and twenty, or until the percentage of available equity is fully utilised, is available only with a variable interest rate. Neither package appears to be available as a line of credit that can be arranged but left unused until required.

The minimum loan amount for the lump sum packages is currently $10,000, with a minimum of $200 per month withdrawn required for the income plans; there is no maximum limit. The Lifestyle Plan can protect up to 25% of the home’s equity from repayment of the loan upon discharge, with an LVR between 15% and 50% of the property’s value, increasing with the age of the youngest borrower to 95; the Freedom Plan can protect up to 20% of the home’s equity, with LVR ranging from 15% to 40% of the property’s value, also increasing with age to 85.

Vision Equity Living offers a portability option should the borrower move house. In addition, should the borrower still be paying on a standard mortgage, a lump sum can be drawn from the available equity to discharge it.

Although no repayment is required, principal reductions are allowed; however, break fees may apply, particularly within the first five years of the loan. The final amount of the loan is withdrawn from the proceeds upon the eventual sale of the property.

Vision Equity Living charges no ongoing maintenance fee. Valuations are required every three years. A current special offer waives the application fee, a saving of $695. The home owner is of course required to maintain the property to preserve its market value, retain sufficient household insurance, and see that all rates and taxes are paid.