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ISCOVER
Staff Reporter
The industry watchdog has launched a new mortgage calculator to help borrowers who are thinking of taking out a reverse mortgage.
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Yesterday, ASIC unveiled its new calculator on its MoneySmart website.
Speaking about the new tool, ASIC’s senior executive financial literacy Robert Drake said the calculator would allow borrowers to test ‘what if’ scenarios and to understand the financial implications associated with reverse mortgages.
“The calculator shows how much your debt may increase over time and what this may mean for your equity in your home. It also shows how your home equity can be affected by changes in interest rates and house prices over future years,” he said.
“A reverse mortgage allows you to borrow money using the equity in your home as security. You need to be at least 55, often older. You generally don't need to make any repayments until you sell the house or die.
“If you decide that a reverse mortgage is the right way to go, you can also use the calculator to explore how much to borrow, including how much as lump sums and how much as monthly payments.”
The calculator has been developed in response to recent legislative changes which will require lenders and mortgage brokers to show customers a range of scenarios using MoneySmart’s reverse mortgage calculator.
They must also provide a copy of the projections to the consumer before assessing whether the proposed loan would be unsuitable.
