Equity Release Products - Accessing the Equity in your home.

If you are an older person you may own your home but you do not have enough cash to meet your needs. You probably can't take out an ordinary loan because you are unable to repay the loan. Equity release products (sometimes called "reverse mortgages" or "home equity loans") may be a way around these problems because they allow you to borrow against the value of your home while you still live there.

These products need very careful consideration and you need to be aware of the consequences of the terms of the mortgage. For example:

1. The interest is added to the loan amount and can build up over time "eating" into the equity of your home;
2. There could also be terms called "default provisions" which can allow the bank in certain circumstances to demand the immediate payment of the full loan amount plus interest. This could cause you to loose your home;
3. You may be left with insufficient funds to enter into an aged care facility, if necessary;
4. Any dependents who live with you may be left without a home to live in after you have passed away.
5. The bank rather than your children may become the beneficiary of your estate.

It is essential that you obtain independent legal advice prior to entering into one of these agreements.

The use you make of the loan proceeds received from a reverse mortgage can also impact on the amount of age pension you receive. You should speak with:

A Financial Information Service Officer at Centrelink on 13 23 00 about these matters ..or..

FIDO - Australian Securities and Investment Commission - financial tips and safety checks: 1300 300 630, www.fido.gov.au: "About financial products - equity release"...or..

NICRI - National Information Centre on Retirement Investments: (02) 6280 9977, 1800 020 110: www.nicri.org.au: "Accessing the Equity in Your Home"....

prior to signing any documents.