The Senior Australians Equity Release Association of Lenders (SEQUAL) has announced a new certificate course which ultimately aims to reassure consumers by differentiating reverse mortgage providers and financial planners who work under the SEQUAL code of conduct.
The course will be mostly undertaken by mortgage brokers, who are the biggest distributors of reverse mortgages, and who are not regulated by legislation, though many financial planners are now also offering the products.
A reverse mortgage is a loan which uses the equity in your home to cover the amount borrowed. The loan is paid back only when the person moves from the home or when they die. There are associated risks with reverse mortgages, as with any credit arrangement, but if people gain legal advice, they can be a useful financial tool in retirement.
SEQUAL says that most Australian reverse mortgage products now come with a ‘no negative equity guarantee’, which protects the consumer from using up all their equity and going into more debt if interest rates rise and their property value drops. But consumers should be aware this guarantee can be waived if, for instance, home insurance payments are missed or other terms and conditions for maintenance of the home are not met. For more information on SEQUAL’s industry regulation and reverse mortgages, visit their website.