Reverse mortgages are increasingly becoming a strategic financial tool for brokers to use with clients over 60. If you have a client who needs access to funds but doesn’t have the required income, or years, to meet bank requirements, these products can unlock equity built over decades without the stress of regular repayment requirments.
Do they:
Suitability will depend on the client’s long-term needs, financial position and objectives
A not uncommon scenario. While the overall divorce rate in Australia has hit a 50-year low, the 60+ demographic is the only age group where the rate of divorce is consistently rising.
Phillip, 68, was going through a divorce and was required to pay a $140,000 financial settlement to his former partner. He also needed to clear a personal loan and legal fees associated with the divorce. His key priority was to remain living in his home after everything was finalised.
Phillip needed to access funds to meet his divorce settlement obligations. However, his income, derived from the Age Pension and occasional Uber driving, would not comfortably support a traditional loan with ongoing monthly repayment requirements. Selling the property would have meant losing his home during an already difficult life transition.
Phillip’s broker recommended a reverse mortgage.
With a home valued at $780,000 and a 28% LVR, Phillip could access $218,400. He drew $185,000 to cover the divorce settlement, as well as his personal loan and legal costs.
Phillip was able to clear his financial obligations and, importantly, remain in his home without the need for regular repayments. This preserved his cash flow and provided stability as he moved into the next stage of life.
Reverse mortgages may not be suitable for all clients and brokers should consider alternatives and the long-term impact on equity
Your Connective Lending Manager or Connective Reverse BDM can help you assess whether a reverse mortgage is appropriate and support you in structuring solutions for clients over 60.
