Uncategorised

Mr and Mrs N have lived in their house in the Sutherland Shire for over 40 years. Unfortunately, Mrs N has recently been diagnosed with dementia and has taken a steep decline in her mental state. This has meant that she can no longer stay at home and has gone into Aged Care. Mrs N’s pension is now going to her aged care costs, but there is still a shortfall in the payments. Mr N is also having trouble paying his own living costs and maintaining their house. Mr N is still in perfect health and wants to live in their family home for as long as possible. They have received financial advice from an Aged Care Finance Specialist and a Reverse Mortgage has been identified as the best option.

To pay the Mrs N’s accommodation costs and ensure that Mr N has enough money to survive, they have opted to take out a Reverse Mortgage facility of $250,000.00. This has been set up to release $3000 per month for 5 years to pay Mrs N’s accommodation costs and supplement Mr N’s cost of living. They have also set up a cash reserve of $70,000 this is in case Mr N has any surprise expenses.

This Reverse Mortgage has achieved a great outcome for the family. It has ensured that Mrs N receives the proper care she needs. It has provided Mr N a great amount of relief as he knows his wife is being taken care of and he has eliminated his financial worries. It has also provided relief to their children who signed the Reverse Mortgage as their mother’s power of attorneys now do not need to worry about their parents’ financial situation.

Mr C (80) and Mrs C (74) have lived in their home on the Northern Beaches for over 50 years and inherited the house from Mr C’s Parents. They have a current Reverse Mortgage with a lender for $350,000 that they took out in early 2018. They have used this to supplement their income $3500 per month, buy new motor vehicles and do renovations on the house.

Due to difficult family circumstances the C’s have had to raise one of their granddaughters who is now at university. They took out the original Reverse Mortgage with a view to reviewing things in 4.5 to 5 years’ time. Having used most of their previous loan facility they are now refinancing their Reverse Mortgage so they can continue to support their granddaughter and stay living where they are for the foreseeable future. Since the original mortgage the value of the house has increased significantly from $2.5 million to $4 million. On top of this increase in the property value they can borrow 4% more of the total value then they could when the original loan was taken out due to their 4-year increase in age. They are now increasing their loan facility to $1 million dollars to ensure they can continue to support their granddaughter and maintain their lifestyle.

When they did the original Reverse Mortgage they were considering selling and moving to the Mid North Coast. This would have resulted in their granddaughter having to live in Sydney and start university without their support. If they had sold and bought another property up north for $1.5million they would have had considerable funds to invest which would have affected their pensions (even after stamp duty and agents’ costs etc). The Reverse Mortgage has allowed them to stay in a lovely home, support their granddaughter, and continue receiving the full pension. Furthermore, the increase in their properties value has been around 4 times greater than the Reverse Mortgage has cost. They fully expect the new Reverse Mortgage to last them the rest of their lives and they will still leave a large inheritance to their family.

Ms Thompsons and Mr Wade are in their 80s and they have an existing Reverse Mortgage of $740,000 to a lender that does not do loan increases. Over the 20 years of their retirement, they have used the Reverse Mortgage to renovate the home and travel extensively.  Even after a health scare for Mr Wade last year, both are still very fit and have no other beneficiaries except each other and some charities.

They want to replace their aging car as it has become expensive to maintain, do some more travel around Northern Australia, and replace their old kitchen appliances. 

Their property has increased in value from $1.6million in early 2018 to around $2.8million.

The combination of their increase in age and property value has provided a solution to refinance to another bank and get a facility limit of $1,092,000 which will give them another $350,000 to spend on the new car, travel, and paying for general living expenses. This will allow the couple to keep up with rising living costs and continue to live an active and enjoyable lifestyle.

(Names and details of this scenarios have been changed to protect the clients identity.)