I gritted my teeth and watched 'A Current Affair' last night to see the segment about reverse mortgages.
My advice is never to deal with any business offering deals unless it's a bank. My mother had two reverse mortgages with St. George. One in 2000 and the other in 2004, one would have been enough but we needed to put in more concrete ramps and pay off another 8 grand on her credit card.
The current balance of the mortgage is $92,000.00 which is still only a third of what the house is valued at. You can add another 8 grand for her credit card debt (again) plus whatever a funeral will cost plus solicitor's fees and we will be paying out a sizeable amount when she falls off the twig. But we said at the time that the house was hers and she should be able to make it safe for her to live in when she was a lot older. There were some things done where we should have put our combined feet down firmly but nothing stands in the way of the mothering steamroller.
The daughter who was shocked at her mother's mortgage being $45,000 more than she thought obviously hadn't been part of the negotiations or hadn't had the details spelled out.
Before St. George would release any money, we had to see an accountant and a solicitor, who both explained every clause in the contract and we had to sign a declaration that we understood every clause. There were pages and pages in the contract where we had to sign that we understood. The accountant had to show us how the compound interest would mount up year by year.
The bank would let us have no more than 25% of the house and land value. The second mortgage was even less and considering how she racked up the credit card again, we probably should have said no to this one. No-one might put Baby in a corner and the same can be said of mother when she's made up her mind. We're still not in a bad position as the house is on a corner block, near two bus routes, two small shopping strips, one bus goes straight to the beach and Southland is 5 minutes away.
On the minus side, the 1950s laundry is asbestos board, the stove is cactus, the outside decking is hazardous to fat people, but it has heating and cooling and we should have no trouble paying back St. George. The money wasn't spent on holidays or a new car, it all went into the house (and the credit card), the contract was explained clearly and I consider the bank acted with integrity. The moral of the story is to stay away from dodgy loan companies.