Financial Standard Comments - Govt provides reverse mortgage guarantees The Federal Government has made its first move in the race to fiscally manage the ageing population, with the release of draft legislation to increase protection around reverse mortgages. https://www.financialstandard.com.au/feed/latest?story=12160042 Mon, 08 Aug 2011 14:43:08 +1000 Mon, 08 Aug 2011 14:43:08 +1000 en-AU Copyright 2026 Financial Standard 5 Comment by Fred () And how are the providers going to provide a "guarantee" of no negative equity? Answer, by increasing the interest rate on the loan, and at the same time, reducing the proportion of the property's value that they will lend.
Can someone please explain why reverse mortgages have a higher interest rate than traditional loans? There is generally a lower LVR, and although there are no repayments, repayment is virtually guaranteed (eventually)

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]]> Fred () Mon, 08 Aug 2011 14:43:08 +1000 Comment by Paul Dwyer () In regard to Fred;s question, reverse mortgage funders receive no repayments until the loan is finalised. A standard home loan receives regular repayments throughout the term. The additional interest rate maintains the profit margin

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]]> Paul Dwyer () Mon, 08 Aug 2011 15:51:45 +1000