Australian Seniors Face Tough Times to Get Reverse Mortgages
Senior home owners in the land “down under” (Australia) who are interested to use their home as equity to get a reverse mortgage payout are now finding that it is much harder to obtain reverse mortgages from lenders due to the credit crunch fueled by the current economic crisis.
Canstar Cannex, a financial products research firm, has said that eight reverse mortgage lenders in Australia have stopped offering new reverse mortgages during the past six months. Harry Senlitonga, a senior financial analyst with Cannex, has said that reverse mortgages are falling victim to the funding shortfalls that financial institutions are currently experiencing.
These reverse mortgage lenders are likely to reinstate the issue of reverse mortgages when market conditions tend to improve a bit.
A reverse mortgage allows the senior to continue living in the same property without making any loan repayments. Upon death of the senior, the inheritors of the property have to clear the mortgage or the lender can sell the property to get back the money.
Getting a reverse mortgage approved can be a costly affair these days. Many reverse mortgage lenders have tightened their belts and have become more averse to taking monetary risks. Reverse mortgage applications are being scrutinized more thoroughly. The market for reverse mortgages is still there, except that their number has shrunk in the current economic situation in Australia. There are still many good products in the financial market for those people interested in taking out a reverse mortgage on their properties.
The big banks in Australia still offer reverse mortgages to eligible borrowers. But many reverse mortgage lenders now seem to be hesitant to offer new reverse mortgages to new customers. Canstar Cannex had to temporarily suspend its reverse mortgage star ratings program. This ratings program was started by Canstar Cannex in October of the year 2007. Seniors considering reverse mortgages soon found the comparison service offered by Cannex’s ratings program to be very useful while taking decisions.
Canstar Cannex has also said that seniors with existing reverse mortgages will not be affected by the tough economic times. They can still expect a continuation of service of their existing reverse mortgages.
