Reverse mortgages uncertainty [Australia]
DESPITE signing up to more than $1.8 billion in reverse mortgages, most borrowers do not understand how their loans work, don’t know how the interested is calculated and think it is like a credit card.
According to a new survey, these elderly borrowers face considerable future risk, mainly because they don’t understand their contracts and the consequences of defaulting.
After receiving such a large amount of money they also spend a lot of it upfront, leaving little or nothing to live off. Many borrowers treat the loan like a credit card which they could draw on any time.