Reverse mortgages have been gaining popularity throughout Australia. While there are some benefits to a reverse mortgage there are also several disadvantages you need to be aware of. If you are thinking about taking out a reverse mortgage on your home make sure you understand what these mortgages entail, how they work, how you will benefit from one and what the pitfalls are.

What Is a Reverse Mortgage?

A reverse mortgage is a home loan package that is offered usually to retirees. These loans offer home owners a means to stay in their house longer by allowing them to take out a loan against the value of their home. In most cases, homeowners do not need to make payments on the loan and the loan does not come due until the owners decide to move out or are deceased. Money received by the homeowner is usable for any purpose including paying household bills, taking a holiday or making a large purchase like buying an automobile.

What Are the Benefits of a Reverse Mortgage?

There are several benefits to reverse mortgages. These loans allow for retirees who have a great deal of their equity tied up in their homes, a means for cashing in on that equity without having to sell. A reverse mortgage allows you to do what you want with the money you receive and there are no payments to make until you leave your home. Additionally, loan recipients usually have a variety of options when it comes to receiving funds from a reverse mortgage including a onetime payment or payments over time.

What Are the Disadvantages of a Reverse Mortgage?

Reverse mortgages can be a risky investment. First, the interest rate is typically higher than a traditional mortgage and with added mortgage fees, there is a chance you could end up owing more than your home’s value if you decide to sell your home down the road. Additionally, if only one spouse owns the home and the owner precedes their spouse in death, the remaining spouse may be forced from the home. Finally, keep in mind that the value of your overall estate will be diminished when you opt for a reverse mortgage, leaving less for your next of kin.

Should You Consider a Reverse Mortgage?

Making the decision to apply for a reverse mortgage on your home should not be taken lightly. It is a big decision and while there are some advantages like getting access to cash, there are also numerous disadvantages to consider. If you are considering a reverse mortgage carefully weigh the advantages and disadvantages, talk it over with your family and make sure it makes sense for you. If you determine that a reverse mortgage is a great option for you make sure that you shop around to different lenders and carefully compare home loan rates. You will want to make sure you get the best deal available.

Reverse mortgages have been gaining popularity throughout Australia. While there are some benefits to a reverse mortgage there are also several disadvantages you need to be aware of. If you are thinking about taking out a reverse mortgage on your home make sure you understand what these mortgages entail, how they work, how you will benefit from one and what the pitfalls are.

Tomorrow Finance provides tools to compare home loans from Australia\’s lenders. When you find the best home loan rates, you save!

Tomorrow Finance provides tools to compare home loans from Australia\’s lenders. When you find the best home loan rates, you save! http://www.tomorrowfinance.com.au

Author Bio: Tomorrow Finance provides tools to compare home loans from Australia\’s lenders. When you find the best home loan rates, you save!

Category: Finances
Keywords: home loan comparison, compare home loans, compare home loan rates