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 Financial Happenings Blog 
Wednesday, November 21 2007

The Australian Securities and Investments Commission have released a report on reverse mortgages today - All we have is this house - that "captures the experiences of home-owners".  The report identified a number of factors that have the potential of hindering sound and informed decision making and thus increase the risk of future problems for those who choose to access a reverse mortgage.  These factors include:

  • The complex nature of these products and the dissimilarity with other credit products,
  • Difficulties faced budgeting for the long-term with access to a large amount of credit,
  • Reluctance to consider the risk of declining health in the future and the impact of this on financial needs, and
  • Children encouraging older parents to take out a reverse mortgage to be used for the benefit of these children, in inappropriate circumstances

 

The key points from the report seem to be that people considering the use of a reverse mortgage should be careful doing so and seek expert advice before stepping into this realm.

 

At A Clear Direction we would be very hesitant in recommending the use of a reverse mortgage to our clients and would only consider it under very specific circumstances.

 

Regards,

Scott Keefer

Posted by: Scott Keefer AT 11:34 pm   |  Permalink   |  Email
 
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