There are currently two forms of equity release options for Homeowners over 60 years of age: debt free equity release or reverse mortgages. A debt free option provides Homeowners the ability to access a lump sum cash amount today in exchange for selling a capped share of the future sale price of their home. A reverse mortgage is a loan option, which provides seniors with the ability to borrow against the equity in their home with interest costs compounding over time.
A debt free equity release option ensures that the Homeowner can protect a share of the future sale proceeds of their home, for either themselves or their beneficiaries. The Homeowner receives a lump sum payment up front, and the provider can only receive its share of the sale proceeds when the Homeowner sells the home, or after they pass away. Under both options, there are no repayments and the Homeowner remains the legal owner of their home.
Some key questions to ask when enquiring about an equity release solution:
- How much can I access?
A Homesafe Wealth Release® customer can receive an amount between $25,000 and a maximum of $1,000,000, subject to eligibility criteria, terms and conditions.
A reverse mortgage will have a loan to valuation ratio which they use to determine how much they can lend to the customer, depending on the value of the home and the age of the homeowners.
- How can I determine how much equity I will keep in future?
Where a Homesafe Wealth Release customer sells a share of the future sale proceeds of the home, they will always receive the share of the sale proceeds which they have not sold to Homesafe: how much they will receive on sale depends on the sale price and when they sell.
With a reverse mortgage, interest charges will compound over the life of the loan and the amount of the sale proceeds of the home which the homeowner will keep on sale will be the balance left over once the loan is repaid.
- Can I receive more than one lump sum?
A Homesafe Wealth Release customer can enter into more than one Contract with Homesafe, as long as the total share of the future sale proceeds sold to Homesafe does not exceed 65%.
A reverse mortgage customer may be able to access a lump sum, regular advances or a ‘line of credit’, depending on their eligibility.
- How is the value of my home determined today?
Most Equity Release providers will arrange for a sworn Valuation of your home to determine if you are eligible and how much they may be able to provide to you.
- What are the fees, charges or interest rate applicable?
A Homesafe Wealth Release customer will pay a deposit towards the Valuation cost for their home, and a one-off fee will be deducted from the available amount at the time of transaction. No other fees or charges will be applicable during the life of the Contract.
Reverse mortgage providers charge an Interest Rate plus the Valuation fee, loan fees and may charge an exit fee in relation to the facility.
- What happens if I need to move into aged care?
Under the Homesafe Contract nothing changes, and you can even rent the home if you chose to do so.
Depending on the requirements of the reverse mortgage provider if you move into aged care, the home may need to be sold.
Homesafe Wealth Release® has been providing a debt free equity release solution for over 15 years. A Joint Venture with the Bendigo & Adelaide Bank, the Homesafe Contract provides peace of mind for the Homeowner that they can release the funds they need to live a comfortable retirement, without going into debt. Whether they wish to pay off their mortgage, renovate the kitchen, buy a new car or take the holiday they always dreamed about, Homesafe Customers are protected by knowing the share of the future sale proceeds not sold to Homesafe will always be protected in the future, irrespective of whether the value of their home goes up or down over time.
To find out how Homesafe Wealth Release can help you, click here.
This is a sponsored article produced in partnership with Homesafe.