If you're getting on in years, chances are you're thinking about retirement. For a lot of Australians, that can mean selling the family home.
However, there is another way to use the value in your property - without moving!
A reverse mortgage allows you to convert part of the equity in your home into a loan.
Equity is the difference between what your home is worth and how much you owe on it – if anything at all.
What's more, you can choose to get your equity payment as a lump sum, regular income or a line of credit – which ever suits you the best.
While this seems like a great option - there is a catch. Here are the things you need to look out for:
- You don't have to make repayments while you live in the home, but you will be charged interest.
- Interest rates are high and debt can rise quickly.
- It can affect your pension eligibility.
- Like all loans, you do have to repay it!
Fortunately, as of 2012, there are laws in place that mean you can't end up owing more than your house is worth.
Go into a deal like this with your eyes open (do you research!) and shop around for the best deal for you and your family.