Friday, August 07, 2009

REVERSE MORTGAGES

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.

8 comments:

River said...

The laundry is asbestos? This will possibly lower the eventual selling price as the new owners will have to have it ripped out by professionals which isn't cheap, then of course they'll have to replace it. The cactus stove is an easier matter. Still, it's valued fairly highly and in a great location.

Jayne said...

Yep, you're lucky your Mother was dealing with a bank and not Shonky & Shonky.

JahTeh said...

River, it has several layers of wallpaper over it but it will have to be redone. Fortunately we re-located the hotwater service outside the house. We just won't have a cent to put into it before we sell so it goes as is.

Jayne, the man from St George came to see us when I explained mum couldn't go into the head office. He told us that they had had to suspend the RM because the children screamed when their inheritance was downgraded. Damn cheek to expect anything to come to them automatically.
St. George has always been good to deal with so I hope the Westpac joining doesn't do them in.

Ann oDyne said...

lord hughes is BACK

R.H. said...

Hello darlings. 4 a.m.

Cricket over. Poms in trouble.

R.H. said...

There will be a recital this evening and I want you all to come.

Venue: RH Temple of Extreme Thought.

Programme: Schubert, Lizt, Brahms, Debussy, Jerry Lee Lewis.

Virtuosi: Mr RH (piano), Miss Sexy Beryl (violin), plus The Prahran Market Choristers (fruits).

Special Feature: Miss Pavlov in a tutu. (Just to make sure of a good audience.)

ha ha ha.

Bring a plate.

ALL WELCOME!

-ROBBBERT!!!!!!!!!!!!!!!!!
(If you get lost just follow the police cars)

R.H. said...

All my bikkies are with St George(except for what I've got buried).

-Robbbert!
On topic.

Middle Child said...

St George has been straight with Don and I. We had been with Westpac for about 20 years and ran a lot of money through there in that time because of the business Don set up after his accident...once we were accidentally overdrawn and they were horrible to us.

So when we sold the business in 2005, we had to deposit the cheque in there and they almost fell over each other trying to get us into their office for Investment advice...three days later we drew it all out and went to St George...it felt sooo good to just get a little revenge...not that they'd really care...but they knew why at least...you do what you have to do Jahteh and it'll all sort out. Asbestos is harmless till its disturbed...we had it in our laundry as well underneath wallpaper...didn't find out till we moved.