6. 'Equity release' mortgage
This is a brand new product currently offered by few lenders in SA. Equity release mortgages have been introduced in other parts of the world over the last 10 years with huge success.
It is aimed purely at retired individuals as a method of releasing some of the equity from their properties, without having to sell, or pay monthly instalments on the mortgage. Consequently there is no income requirement.
Equity release mortgages are most suitable for senior citizens who are asset rich but cash poor and are primarily used to support retirement income and pay for home-improvements and healthcare.
The bonded property must be the primary residence
Only for homeowners aged 65 years and older.
Either lump sum loan or monthly withdrawals, or a combination of both
No monthly repayments
Tips for the client
Carefully assess the impact of a reverse mortgage on your overall finances and estate planning
Equity release mortgages are better suited to high value properties
Reduce the effect of the high interest rate by taking the loan in monthly instalments as apposed to a lump sum payments - interest on a lump sum payment accrues more quickly
Read about a 'building bonds' and 'future use' mortgage