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If you're thinking about a Reverse Mortgage but maybe you're not quite ready yet, these true-life case studies might help.
Our team of brokers have shared real customer examples across a range of Reverse Mortgage scenarios, such as funding for Cost of Living, Debt Consolidation, and Retirement Cashflow.
Although the case studies are unique, each has been selected to illustrate stories we commonly encounter.
*To protect the privacy of our customers, names have been changed & different photos used. Otherwise, the details in each case study are 100% genuine.
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.
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.
Total Reverse Mortgage loan facility of $247,000, comprising:
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, 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.
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.
Day 1 Requirements: $355,000
Cash Reserve: $0
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 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.
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.
Day 1 Requirements: $290,000
Cash Reserve: $35,000
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 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.
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.
Day 1 Requirements: $110,000
Cash Reserve: $90,000
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.
Allan and Nancy, hailing from regional Victoria, epitomise the success story of self-made individuals.
This high net worth couple, comfortably settled in their late 60's, own an unencumbered property worth $1,500,000.
Not reliant on the Aged Pension due to their astute financial management, they've always enjoyed a certain independence in their financial decisions.
With the horizon of retirement drawing closer, Allan and Nancy were contemplating the next phase of their lives.
They envisioned a future where they could scale down their business commitments, gradually transitioning to semi-retirement over the ensuing 5-10 years.
However, they faced a dilemma: how could they maintain their desired lifestyle without eating into their hard-earned superannuation?
Reverse Mortgage Amount: $322,000
Goal:
Borrowing Details:
Strategic Move:
Future Planning:
With this structured Reverse Mortgage in place, Allan and Nancy have crafted a stress-free path to their semi-retirement. They can now ease out of their business commitments without financial anxieties, confident in the knowledge that they're drawing upon a well-thought-out income supplement (rather than depleting their superannuation prematurely).
Ian and Phyllis, a couple rooted in metropolitan Melbourne, have seen the ebb and flow of life from their late 70's vantage point.
Their property, valued at $750,000, had an existing Reverse Mortgage (with another lender) amounting to $70,000.
The full couple's Aged Pension was their sole income source, helping them manage their day-to-day expenses. But as time rolled on, the rising cost of living became a growing challenge.
Though they were "managing" in the present, Ian and Phyllis found themselves increasingly uneasy about their financial stability, especially given the escalating cost of living.
They had already downsized once, with a clear intention to stay in their current home for the foreseeable future. But the interest charged on their existing Reverse Mortgage loan was, in their view, excessively high.
They needed a solution that would offer them both relief from this financial strain and a buffer against future uncertainties.
Reverse Mortgage Loan Amount: $250,000
Existing Debt Clearance:
Interest Benefit:
Financial Safety Net:
By making a strategic shift in their financial arrangements, Ian and Phyllis secured a brighter, more stable future for themselves. With the unnecessary weight of a higher-interest Reverse Mortgage off their shoulders, and a substantial cash reserve at their disposal, they found themselves better equipped to navigate the challenges of rising living costs. Their proactive decision not only ensured their continued stay in their beloved home but also gave them peace of mind, knowing they had a buffer against any unforeseen expenses.
Nick and Maria, proud homeowners in metropolitan Melbourne, have experienced life's highs and lows together.
Despite owning a property worth a hefty $1.5 million, they had an outstanding home loan of $60,000 with a bank.
Relying on the couple's Aged Pension to fund their daily needs, they found themselves at a crossroads, struggling to uphold the lifestyle they once cherished.
For Nick and Maria, the aspiration was clear: they wished to stay in their family home for the long haul.
However, the financial strain of their existing home loan and the aspiration for certain amenities, like a new motor vehicle, loomed large.
They felt the pinch of their limited pension income and yearned for a financial solution that could help them close out the home loan and afford some lifestyle upgrades.
Reverse Mortgage Loan Amount: $150,000
Lump Sum Usage:
Cash Reserve:
Monthly Financial Support:
With this financial move, Nick and Maria rejuvenated their lifestyle. Free from the shackles of their previous home loan and enjoying the comfort of a new vehicle, they found renewed joy in their daily life. The regular monthly advance further alleviated their financial worries. Now, with a substantial cash reserve ready for any rainy day, they can look forward to a relaxed and secure future in their cherished family home.
Deborah Collett
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