While Europe is slowly crawling out of the doldrums of austerity, household debt seems to be on the increase again. Lenders seem to enjoy the boost in the takeup of their product ranges, but there is a particular product that is enjoying an upsurge in popularity. We explore the reasons why seniors consider reverse mortgages to be a viable solution.
Retirement Payout Woes
It’s not just the market crash of 2007/2008 that has a hand in lower retirement expectations for many retirees, but also a significant deficit in savings. This creates a situation where retirees are faced with a real risk of running out of funds during their retirement. With the reverse mortgage, consumers have the option to receive a monthly income for the chosen term, whether a specified period or until death. Although this may reduce the inheritance for their next of kin, it does provide them with the dignity of taking care of their own expenses.
The Rising Gap In Medical Cover
Having medical cover or a medical plan does not always guarantee that all medical expenses are taken care of. Massive bills often leave pensioners with very little option but to cash in their savings or request financial aid from their children. For this reason, pensioners are considering the lump sum payment offered by a reverse mortgage deal. With these funds, they can settle hospital bills or make the necessary changes to their home should the illness leave them immobile.
Property Finance and Liquidity
The investments in property are great for those who wish to build up a portfolio of assets. But what happens when the property doesn’t fetch as much on the market when the owner wishes to sell? The equity in the property may work for some seniors as they have access to a reverse mortgage. With fees and costs, there may be other more cost-effective solutions, but pensioners often find themselves at the ceiling of the term available due to their age.
Consumers are recommended to discuss their options with their financial advisor to determine whether this is the best route for them. This may not be a solution for everyone, as the terms and conditions may be a bit restrictive. There may also be other alternatives that make more sense as opposed to tying up the equity in the property which pensioners may qualify for.