Debt consolidation
Refinance home loan or credit card debt
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No Monthly Repayments
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Retain Home Ownership
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Use a Reverse Mortgage to pay out debt & loans
Are you over the age of 55 and worried about credit card, home loan or personal loan debt? Feeling stressed and anxious about paying bills and loan repayments?
You’re not alone. Reports from the ABC confirm that more older Australians are experiencing distress and a deterioration of mental health issues as a result of high levels of debt. These days, it is now much more common for people to retire without having paid off the mortgage.
If you’re over 55 years of age and own your own home, it’s possible to pay out your debts with a Reverse Mortgage loan. If you have amassed debt that you can non longer afford to service, a home senior’s home equity loan may be the answer to improve your financial situation.
Alternatively, if you already have a Reverse Mortgage with another lender and you are seeking a lower interest rate, Seniors First can help you refinance a Reverse Mortgage refinance to a cheaper rate may help preserve more home equity for spouses, children or other beneficiaries.
Over 55's Debt Consolidation Case Studies
Heidi, 64 years old
Background
Like so many other women of her age, a divorce had left Heidi somewhat financially vulnerable. She had approached her current mortgage lender to let them know that she could no longer afford repayments.
They agreed to pause her loan repayments for a period of 3 months, to give her time to organise a refinance.
Borrowers’ Concern
Heidi knew she could not afford to resume repayments and would be forced to sell the home in order to pay out the home loan if she could not organise a solution.
She did not want to sell and relocate due to downsizing costs. She was also happy and settled in her community and did not want to leave. She was also worried that her disability pension would not cover all her lifestyle costs, going forward.
Loan Purpose & Structure
Total Reverse Mortgage loan facility of $247,000, comprising:
- a lump sum of $141,000 to refinance all home loan and consumer debts
- an additional ‘cash reserve’ of $106,000 (available, but undrawn funds) for future use
Outcome
Heidi was able to stay in her cherished home for the long term. Seniors First refinanced her home loan and consumer debts, alleviating the financial pressure of monthly repayments. With the cash reserve she was able to supplement her income for the next 8-10 years, and fund other projects she wanted to do such as minor home renovations, a new car, and dental work.
The Reverse Mortgage loan solved her immediate financial problems, but also improved her quality of life by reducing the stress and worry she was experiencing .
Joan, 73 years old
Background
Joan, together with her late husband, were once at the helm of a thriving restaurant. The abrupt disruptions caused by COVID-19, however, shattered their business dreams. The grief was compounded when, a year after her husband's passing, Joan discovered a debt of $80,000 to their suppliers, which prompted a caveat on their property.
Borrower's Concern
Now solely reliant on her Age Pension, Joan faced financial encumbrances that seemed insurmountable. Seeking solutions, she approached her lender and, in a gesture of understanding, was granted a 1-year reprieve on her repayments. But parting with her home, a sanctuary of memories, was inconceivable to Joan. She was resolute in her decision to retain it for at least another 3-5 years.
Reverse Mortgage Loan Purpose & Structure
Day 1 Requirements: $355,000
- Determined to regain her financial stability, Joan's goal was to refinance her home loan, car loan, and credit card, while also ensuring all outstanding dues were cleared.
- Although her credit card was refinanced, she kept the facility active for unforeseen needs.
- A segment of the loan was earmarked for home improvements, allowing her to invigorate her dwelling with a new coat of paint and other minor enhancements.
Cash Reserve: $0
- Prioritising immediate financial alleviation, Joan chose to draw all her funds upfront.
Outcome
Post-refinancing, Joan experienced profound relief. With her financial concerns adeptly managed, she found her Age Pension adequately covered her daily living costs. Beyond the tangible benefits, this fiscal transition granted Joan immense emotional solace. She now looked ahead with fewer financial concerns, taking comfort in the walls of her cherished home.
Vince, 68 years old
Background
Vince had been navigating a dual income source, drawing from both his Age Pension and earnings from a part-time job. This income balance was already delicate, with a significant portion of his pension funnelled into servicing his existing mortgage. When interest rates climbed, the financial strain intensified, rendering his mortgage repayments unaffordable. Vince, unfortunately, fell a few months behind, and the bank began sending ominous foreclosure warnings.
Borrower's Concern
Despite these financial adversities, Vince remained deeply attached to his home. It represented more than just bricks and mortar; it was his sanctuary, filled with memories and personal history. The looming threat of losing it added emotional weight to his already challenging financial circumstances.
Reverse Mortgage Loan Purpose & Structure
Day 1 Requirements: $290,000
- Vince chose to refinance his home loan.
- His goal: prevent foreclosure and establish a sustainable financial structure.
Cash Reserve: $35,000
- Vince set up an additional line of credit.
- Purpose: a cushion for unexpected expenses and future needs, providing a financial safety net.
Outcome
With the successful refinance, Vince averted the bank's foreclosure and streamlined his finances through debt consolidation. By making steady repayments, he curbed the compounding interest. This financial restructuring allowed Vince to work by choice, not out of necessity. The refinance not only solidified his financial position but also granted him autonomy to live on his terms.
Bob & Sandra, 69 and 72 years old
Background
Bob and Sandra, a resilient couple in their golden years, had relied on their joint Age Pension for sustenance. Just a year prior, they had confidently managed their finances, servicing their debt through their pension and occasionally dipping into their savings.
Borrowers’ Concern
The changing financial climates introduced unforeseen challenges. The combination of rising interest rates and an escalating cost of living began to eat away at their savings at an alarming rate. What was once a financial cushion started to feel like a fast-depleting resource.
Reverse Mortgage Loan Purpose & Structure
Day 1 Requirements: $110,000
- The couple aimed to refinance their home loan.
- They also wanted to replace their 15-year-old car for dependable transportation.
Cash Reserve: $90,000
- Bob and Sandra set up an extra line of credit.
- Purpose: supplement their Age Pension and provide a continuous income source for the coming years.
Outcome
Thanks to the refinancing, Bob and Sandra found themselves on steadier financial ground. The refinance not only addressed their immediate financial concerns but also set them up with a sustainable plan for the foreseeable future. With a newer car, their mobility was ensured, and the supplementary line of credit acted as a much-needed safety net against any potential financial shortfalls. The strategic financial restructuring granted the couple peace of mind, allowing them to enjoy their retirement years with reduced financial anxieties.
Benefits of using Reverse Mortgage for debt consolidation
The reality is that many people continue to worry about their debt repayments throughout their retirement. The good news is that it’s possible to streamline your debts and simplify your financial obligations by refinancing with a Reverse Mortgage. Relieve your stress by accessing the equity of your house without the emotional burden of having to move or sell. You will remain the full legal owner of your home and benefit from any increases in its value.
Imagine how much better your cash-flow could be without the need to pay off credit cards or loans each month? Free up your cash-flow and access additional funds which can be used for a vacation, the purchase of a new car, medical cost or even home improvements. Treat yourself or your grandkids! No regular repayments are required (although voluntary payments can be made if you wish). You may receive a lump sum, regular income payments, a cash reserve or a combination of all three.
Reverse Mortgage interest rates are typically lower than that of high-interest personal loans or credit cards. If you are an individual who is asset rich and cash poor with a limited income, consolidating your debt and refinancing with a Reverse Mortgage may substantially improve your quality of life. The accrued interest is ‘capitalised’ and charged back to the loan account each month.
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“Sincere thanks to Andrew and Seniors First .. the loan has been life changing.”
Deborah Collett
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Senior's First has developed a reputation as an award-winning Reverse Mortgage broker, and a trusted name among public policy organisations, the aged care industry, senior’s groups, older borrowers and their families.
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