SPEAKER_00: 0:20

If you have someone old in your life right now, old, older, it's trying to give like a little summary here. Listen up because we're gonna talk about reverse mortgages. Hello, James.

SPEAKER_01: 0:32

Kiora.

SPEAKER_00: 0:33

Alright, Kiora it is. Reverse mortgages. This is your favorite topic. You are our resident reverse mortgages specialist.

SPEAKER_01: 0:42

It's interesting. I mean it it's an it's a really interesting topic because there's pros and there's cons and stuff like that. So you just it's it's not for everybody, but it's a really interesting topic given uh the aging demographic that we have and the wealth that people have in their extreme wealth, really, in their in their properties. You know, it's pretty common for a be mortgage-free and have a million-dollar property these days, but not have any cash to speak of other than the pension.

SPEAKER_00: 1:12

Okay, so fill me in. What what happened recently?

SPEAKER_01: 1:15

Generally speaking, I mean I'm I'm beginning to think a lot more like when we first got started in this in this business, it was for me anyway, it was like reverse mortgages, boom, that is such a great idea, and we well not great idea, great product. And we've got lenders that do a really good job of it that we work with. And so I I I had a strong opinion on it. But then when you get talking to people, there are there is a a negative uh connotation. Yes. Because perhaps people have been taken, well they certainly have been in historically taken advantage of vulnerable people with reverse mortgages, but there's a lot of sort of rules and regulations in place now with the from the lenders that we work with to protect our vulnerable clients.

SPEAKER_00: 2:02

Absolutely.

SPEAKER_01: 2:02

So and what we're sort of learning is that it's not ideal for everybody, but if it's your only option, you know, uh as a last resort, and you need some money to live on, if you're in your 70s or 80s, or if you need a operation, some kind of health care, or renovations to your house so you so a future-proof set so you can live there, also that you know the younger generation can come and live with you. Or there's some really good pros. The the main con, I think, and when I say con, I don't mean to say con, I mean the main negative is that we're not conning people here. Is that is that you don't pay the loan back until you either until you sell your house, which can be when you pass away or when you go into a retirement village or something like that. So if you take the reverse mortgage out in your 60s, early 60s And people tend to live to 90s and beyond, you've got a huge loan to repay. So that is either gonna it may stop you in your 80s from going into a retirement village because you won't have enough left of your million dollar property to pay for the retirement village. And the other or the other thing is that it it detracts from the amount that you might leave in your estate for the for the next generation. Yeah.

SPEAKER_00: 3:28

Um but and it blows my mind how many people actually come to see me and they go, you know, I've got an aging parent and they might pass away soon, they might leave me inheritance, but they don't know if mum and dad has actually taken out reverse mortgage. And and it's sad to think from one hand that those people are relying on that inheritance to help them ahead with their finances. And imagine the situation if the parents do pass away or sell the house and there's actually not much asset left.

SPEAKER_01: 3:57

Yep. And that is going to be fair, that is likely gonna happen because you know, people are living a lot longer, but the health care it's the costs involved, I think we looked into it because you know, as you know, my mum passed away recently and we had an idea that it was gonna cost$25,000 a month in the age care I've got to that point. So you know, there's and this is what I've I think it's really important to try and do is that I don't think we you cannot it's much better for your future if you if that's like a an added bonus or something later on, you know. But we really have to manage our own situation and just almost work as if you're not gonna get anything. You know what I mean? Like I know that's I think it's probably the way it's quite hard to think like that if you think of the extraordinary assets that your parents build up.

SPEAKER_00: 4:52

But you can't earmark that for the future.

SPEAKER_01: 4:54

No, that's right, because it just might not be there. Um and and as we're learning, parents don't always parents don't always and my I've been very lucky, you know. My parents tell me exactly what they have and what they don't have and all that kind of stuff. But you know, we get to talk to lots of people and they just uh what's that word, accaste at the idea of talking to their family about their financial situation. So it's it's tricky. You just gotta be open around your parents and not be too judgmental, I think, unless it's their money, eh? Yeah, they can do what they want with it.

SPEAKER_00: 5:29

Exactly. And it astonishes me how many people get sad when their parents are doing whatever they want with their money and they go, What? Yes, um, yeah, but that that uh sidetracks you from the reverse mortgages topic because what I want to understand is is there a minimum of the age that you can be in order to obtain reverse mortgage?

SPEAKER_01: 5:51

Yeah, so the minimum age is 60. Okay, so and that's what we're just talking about.

SPEAKER_00: 5:55

Like if you know, if you do it at 60, it's so 60 is absolute minimum entry point. You can't be 55 or 58.

SPEAKER_01: 6:01

Yeah, 60, yeah.

SPEAKER_00: 6:02

It's gotta be 60. And so if you win lotter, you can't just pay off that mortgage.

SPEAKER_01: 6:08

You can.

SPEAKER_00: 6:08

So if you've got a lump sum, and let's say let's flip it on the other side, and if you've got a child that is doing amazing, has good income, and finds out you've got this reverse mortgage and wants to, you know, give your lump sum to pay off, you can pay it off, right? You're not trapped, you don't have to wait for the rest of your life to wait to sell the house in order to get out of it.

SPEAKER_01: 6:29

Exactly. You can do absolutely you can do that. And the other thing that comes up is that you will always own your house. They will they cannot get rid of you from your house. Oh, that's good. Which is well it's often the first question, and it's uh you know, it's obvious to us, but I don't know if that was always the case.

SPEAKER_00: 6:45

But it's also scary to think about it. I mean, I'm trying to imagine myself as a you know 65, 75-year-old person, and especially growing up in a time when there was not much technology available and you believe people and then you get burned because of whatever experiences you would have had, right, with finance companies at the time. Because back then the regulations wasn't as strict as you were mentioning. So imagine being a 75-year-old vulnerable person, being so naive and really worried if someone is gonna come and steal your house from under you.

SPEAKER_01: 7:17

It must be hard because how do you know who you can trust? Because those back in those days, because what we've been talking about that a lot lately with my parents' friends, just about every one of them got burnt during those finance company days, uh, back in the just before the COVID, uh not COVID, just before the global financial crisis. All those blue chip apartments and yeah, they just they were providing phenomenal returns, as you probably remember, but but yeah, so it is hard. How do we make that jump? How do we provide this great service for those people who are actually needing it? They are needing it, but they are also getting taken advantage of in various other uh aspects of their life.

SPEAKER_00: 8:00

So it's a fine balance, right? We and we have to uh look after them, and it's better if they come to us versus some sharks out there. Yep.

SPEAKER_01: 8:09

We have standards. We have standards. We do have standards, believe it or not.

SPEAKER_00: 8:13

That we have to adhere to. James, what's the minimum interest rate?

SPEAKER_01: 8:17

I think it's probably I think them the interest rate is probably it's quite that's that's the thing, it's probably a little bit higher. It's a floating rate, so I would imagine it'd be in the late sevens at the moment.

SPEAKER_00: 8:28

Which is again still not that bad. If you only need 50k, it's not that bad.

SPEAKER_01: 8:33

And the one thing we work out or or or the lenders that we work with work out is how that m that how that compounds over time. So you can get an idea of what your scenario might might look like in 10 or 15 years. I mean, if we know how much money you want to draw down, we I mean I can help you with that. But you know, the the people that we work with provide that service as well. And you know, it's a legal requirement uh it's a requirement that you must get legal advice, like as you would when you go into re into a retirement home. There's all sorts of standards and stuff.

SPEAKER_00: 9:06

Okay, awesome. Guys, thank you so much for listening in. I hope that has been useful. There's a lot of talking in this one, but the main message is there are options available for our older clients. And James is a great specialist in that now. So please do reach out. And if you want us to cover a special topic, let us know. Thank you so much.

SPEAKER_01: 9:27

Bye bye.