Question:
I recently read about reverse mortgages on iafrica.com. Where can I find more information on exactly how it works, and which banks offer this product? I have a mortgage bond of R700 000 but my house was valued by Standard Bank last month for R1 500 000. Can I use a reverse mortgage bond to "unlock" this equity?

Answer:
Nedbank is currently offering what it calls a 'reverse mortgage' — or its Home Income Plan. These have been running in the UK and America for many years. It offers people between the age of 65 and 85, living with a paid up bond on their private dwelling, an opportunity to borrow up to 45 percent of the equity that is locked up in that property.

This is accomplished by registering a further bond on the property (for which the client will be charged about R6000). The loan must be repaid at the end of a five-year term, at which time, subject to the bank's discretion, a new loan may be granted. It's important to note that this means you cannot use this product to access your equity.

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