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Article: Unlocking equity with reverse mortgages: Australia's rapidly ageing population suggests there's room for reverse mortgage products, even though they've been tried before without much success. (Mortgages).
- Article from:
- Journal of Banking and Financial Services
- Article date:
- February 1, 2002
- Author:
CopyrightCOPYRIGHT 2002 Australian Institute of Banking and Finance. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Demographic trends in Australia mirror those in the developed economies. As a result, the time may be ripe for innovative products that benefit older Australians who have built up considerable home equity, but who are cash poor.
As its name implies, a reverse mortgage involves a reversal of the cash flow pattern associated with a traditional mortgage. The borrower (home owner) typically receives a monthly cash payment until either his or her death, or the house is sold and the lender receives a balloon repayment of the loan out of the proceeds of the property sale.
Such an arrangement would appeal to individuals (or families) who are no longer earning a ...