If you are a home owner aged 62 or over, reverse mortgage loans are designed for you to get the best out of your home equity. The most common reverse mortgage loan is Home Equity Conversion Mortgage or HECM. Like a regular mortgage loan, the property is what secures the loan and the title is in the buyer’s name.
The difference between a HECM loan and a traditional mortgage loan, apart from the borrower’s age, is that the home equity decreases. Added to this, there are no monthly mortgage payments. This doesn’t mean that the loan is free of charge. The strategy used for repayments is different, that’s all. Any outstanding amount owed is paid back when the home owner moves out of the property or passed away.
Like any other type of loan, HECM loan will incur interest. It will also incur monthly charges such as loan fees, tax and insurance. Charges accumulate into a final sum, rather than being invoice every month. When the home buyer moves out or passes away, the balance owed is paid off by the lender or heirs.
Reverse mortgages have an upside and a downside. One of the benefits is that you get to use up the equity of your home – no monthly rent payments. But a downside to reverse mortgages is that if there isn’t enough money to pay off the outstanding amount owed to your mortgage lender, your heirs will struggle to pay back the loan. Another upside is your right of rescission, which means you are able to change your mind without being penalised. You have 3 business days to cancel the loan application.
If you have any issues or concerns in relation to reverse mortgage loans, please give us a call for a no commitment consultation with one of our property solicitors. SG
DG Law were fantastic throughout our purchase process. We had a short, fixed, timeline to
DG Law supported us through a very difficult contractual negotiation to achieve exactly the outcome
We were very pleased with the way that DG Law helped us on our transaction
DG Law resolved a difficult lease renewal for us and their services were excellent –
I needed understanding and experienced legal advice. DG Law provided an excellent service at a
My experience was second to none – the service was professional and personal. DG Law
DG Law always step up to the plate on our transactions and handle the various
DG Law was recommended to me and my partner and I received excellent advice –
Having worked with DG Law a number/couple of times now, I have been really impressed
DG Law were constantly at hand, and kept pro-active throughout the thorny process of getting
DG Law came recommended to me and whilst setting up a new business it was
We were recommended three lawyers to handle the sale of our seven year old successful
We live by our core values of transparency, flexibility and being honourable – every day
We put ourselves in your shoes so we understand your problems from the inside out
We deliver our advice in a way that is easy to understand