A Reverse mortgage essentially allows you to use the equity in your home as security to borrow money. They are generally only available if you are aged 60 or over, you don't need an income to qualify and you don't need to repay any money while you live in your home.
The guide is entitled 'Thinking of using the equity in your home? A new independent guide to reverse mortgages and other equity release products', and is designed to assist people who are considering whether an equity release product is right for their individual circumstances.
Launching the guide last month, ASIC Chairman Tony D'Aloisio said that while equity release products offer benefits, they can also have significant risks.
"Our research shows that people find it difficult to understand these products", D'Aloisio said.
"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."
Another concern is that people are sometimes encouraged to borrow more money than they actually need, ultimately at a greater cost to them.
The guide, which is available from the ASIC website, looks at:
- understanding the risks and costs of equity release products
- alternatives to equity release products
- whether equity release is right for you
- what terms and conditions to look out for and
- where to find more information
It also provides case studies to illustrate the costs of equity release products, the effect of fees and what happens if people access more than they need.
Posts
