Reverse Mortgages

[Mark Laszczuk]

http://www.theaustralian.news.com.au/common/story_page/0,5744,11048818%255E462,00.html

[Rolf Latham]

Hiya

The negative equity suggestion shown here uses a model of 7 % rates with 5 % average growth over 22 years.

while I would not disagree with the possibility of the outright numbers, the ratio between them seems way out.

Id suggest that over a short window its possible for a negative equity position to occur quite quickly.

Ta

rolf

[rodimus]

What is this reverse mortgage thingy? Can someone explain briefly?

[geoffw]

What is this reverse mortgage thingy? Can someone explain briefly?From the article quoted- a good succinct definitionAs its name suggests, a reverse mortgage allows a borrower to free up cash by partly re-mortgaging their property.

Interest and, in some cases, other fees are not repayable until the borrower dies or sells up. Generally the borrower can mortgage up to 35 per cent of the value of the property, but the effect of compounding interest means the loan to value ratio rises sharply if property prices are sluggish.

[quiggles]

And in one of today's papers, I saw that renowned defender of the poor, Jeff Kennett, announce that he would head a service dedicated to easing the lives of asset-rich, cash poor seniors.

Warms the cockles of yer 'eart, it does. :rolleyes: