Introduction

Recent research by Dr Diana Olsberg and Mark Winters published by the Australian Housing and Urban Research Institute found that "More than four out of five respondents (82.8%) saw their home as an investment for the future, 86 per cent said that owning a home means that one is free to make decisions about how one lives, and three quarters (74.8%) said a person could sell the home or borrow against it to provide for needs in old age. The predicted probability of home-owners moving in the future was very low compared to people who were living in privately rented accommodation. Home-owners were most likely to want to age in place (64%), although for many their attachment was not necessarily to the home but to the area in which they lived. Location was particularly important. Pleasure in and familiarity with the area and its facilities were regarded as important factors contributing to people's day to day lifestyles. Proximity to people they know in the area was also important."

This research is very significant because it covered a sample of 7,000 men and women aged 50 or over throughout Australia.

The research also found that "one quarter of respondents expect to use up all their assets before they die. One third of Baby boomers expect that to be the case. More than one third already have assisted children financially, mostly loans not gifts. The desire to bequeath assets is diminishing. Remarriage and new relationships create complexity. There is a dominance of 'Put yourself first after years of hard work' attitudes. One commonly-used expression is SKI (Spending Kids Inheritance)."

The survey clearly shows that the age of withdrawing equity from ones home has spread to Australia.

Products which provide this facility are called "equity release" or "reverse mortgage" products.

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The Concept Behind Equity Release

The concept behind equity release is simple - an amount is borrowed against a home and the amount borrowed plus interest is not usually repaid until the property is sold. No interim repayments are required.

As with any product of this type there are risks and issues which have to be considered. As advisers you should be aware of all the factors which influence which product features a client should ultimately use.

The following issues to consider are:

1. The financial stability of the lender
2. Interest rate risk
3. Impact of fees and valuation costs
4. How the loan will be repaid
5. Views of all potential beneficiaries
6. Centrelink assessment issues, such as gifting
7. Income tax implications

This document seeks to address all these issues whilst also helping you to understand the Home Equity Access product.

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How Equity Release Products Work

Equity release products allow a person aged over 60 to use the equity they have built up in their home.

They can use the proceeds to gift money to children, grandchildren or elsewhere, renovate the house, buy a new car, take a holiday or provide extra money for living expenses.

With reverse mortgage products the loan does not have to be repaid while the borrower remains in the house. This means that the amount borrowed and the interest on that amount, as well as any fees levied, compounds.

For example, suppose a person borrowed $100,000 at 8.2% then the amount outstanding increases in the following way:

Year	Amount Owed at Start of year	Interest in Year	Amount owed at end of year	Value of Property	Equity in Property
1	$100,000	$8,515	$108,515	$515,000	$406,485
2	$108,515	$9,240	$117,756	$530,450	$412,694
3	$117,756	$10,027	$127,783	$546,364	$418,581
4	$127,783	$10,881	$138,664	$562,754	$424,090
5	$138,664	$11,808	$150,472	$579,637	$429,165
6	$150,472	$12,813	$163,285	$597,026	$433,741
7	$163,285	$13,904	$177,189	$614,937	$437,748
8	$177,189	$15,088	$192,277	$633,385	$441,108
9	$192,277	$16,373	$208,650	$652,387	$443,736
10	$208,650	$17,767	$226,418	$671,958	$445,541
15	$313,960	$26,735	$340,695	$778,984	$438,289
20	$472,421	$40,228	$512,649	$903,056	$390,406

It needs to be borne in mind that the value of the property is also compounding as the table shows. Suppose the property that backed this borrowing was worth $500,000 when the borrowing commenced, then assuming 3% house price growth, that property would be worth about $672,000 after 10 years and just over $900,000 after 20 years. In fact allowing for the above assumptions the amount borrowed and the compounding interest would not exceed the value of the property for over 30 years.

This is a fairly conservative estimate of house price growth given the historical trend in Australia, but it is obviously sensible to adopt this approach. It should also be remembered that ABN AMRO offers an option to protect up to 25% of the customer's equity, which can be used if the customer is seeking certainty in having some equity remaining either for themselves or for their estate.

You can use the calculators on the website to test different scenarios of house price growth and interest rates, plus the term of the loan, to see how much equity a customer will have left when the loan is repaid.

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Who is ABN AMRO?

ABN AMRO is the 13th largest bank in the world – with worldwide assets of AUD$1,675 billion – with over 4500 branches in 53 countries. ABN AMRO has been established in Australia since 1971 and has offices in Sydney and Melbourne.

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Reverse Mortgage Product Summary

Minimum Amount	$20,000
Maximum	No maximum, subject to the assessed value of the security property
Minimum Age	60
Loan to Valuation Ratio	Based on age of youngest borrower
Property restrictions	No retirement villages/resorts or transportable homes. Some postcode restrictions apply.
Negative Equity Guarantee	Neither the borrower nor their estate will owe more than the value of the property unless the borrower breaches the loan terms.
Insurance requirements	Current homeowners replacement insurance policy
Security	Registered first mortgage over residential property

Product Choices

Lump sum options	Fixed interest rate over 5, 10, 15 20 years or lifetime Variable interest rate
Monthly income options	Variable interest rate over 5, 10, 15 20 years. Equal payments or 2.5% annual increase
Flexible drawdown options	Standard variable interest rate Draw funds as and when required up to an agreed limit.

Borrowers may elect to take the loan in combinations of fixed and variable interest rates and combination lump sum, monthly income and flexible draw facility. In addition, up to 25% of the value of the home may be protected (maximum level of borrowing will be effected)

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Reverse Mortgage Set up costs

Settlement Fee	$700
Valuation fee	$300 for properties < $1m; $550 for properties > $1m; On application for properties > $2m
Independent legal advice	Costs borne by applicant
Mortgage Stamp Duty	Payable in some States

Once the loan is established

Further drawdowns/redraws	Minimum $1,000 (variable rate loans only)
Drawdown / redraw fee	$0
Repayments	None required until borrowers cease to reside
Optional payments	Minimum of $1,000 (restrictions apply for fixed rate loans)
Repayment in full - Involuntary	No fee
Repayment in full -Voluntary	Sliding scale
Fixed rate voluntary repayment	Economic cost
Discharge fee	$250
Post settlement variations	$250
Portability	To another acceptable property
Repayment triggers	Repayment is required within 12 months of both borrowers permanently vacating the property
Borrowers rights	The lifetime tenancy and no negative equity guarantees are contractual rights
Borrowers obligations	Must maintain property and buildings insurance
Revaluations	Completed every three years at no cost to borrower

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Protecting Reverse Mortgage Clients Interests

• No negative equity guarantee
• Option to protect a percentage of equity
• Strongly recommend independent financial advice and discuss with beneficiaries and family
• Compulsory legal advice around loan documentation
• ABN AMRO is a member of SEQUAL (see www.sequal.com.au/)

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How much can be released?

This is based on two key issues - the agreed value of the property (determined by an independent valuation) and also the age of the youngest borrower

The following LVRs are available on the Reverse Mortgage loan:

AGE	LVR	AGE	LVR	AGE	LVR	AGE	LVR
60	15%	70	25%	80	35%	90	45%
61	16%	71	26%	81	36%	91	46%
62	17%	72	27%	82	37%	92	47%
63	18%	73	28%	83	38%	93	48%
64	19%	74	29%	84	39%	94	49%
65	20%	75	30%	85	40%	95+	50%
66	21%	76	31%	86	41%
67	22%	77	32%	87	42%
68	23%	78	33%	88	43%
69	24%	79	34%	89	44%

Use website calculators to understand How much can I borrow?

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What interest rate will apply?

Given the compounding of interest, and its consequential potential to erode the equity the client has in their house, the interest rate that applies is very important.

Some equity release products only have a variable interest rate, others only a fixed rate. The ABN AMRO product offers fixed and variable or a combination of both for its lump sum option.

A variable rate would be used when a client needs a regular monthly income or a flexible drawdown facility. They can also have a variable rate on the lump sum amount, depending on their own risk profile and perception of future interest rates.

The obvious problem with the variable rate is its lack of certainty. With the compounding of interest and the impact of interest rate rises can be significant in eroding the amount of equity left available to the customer at the end of the loan. One option could be to fix an element of the borrowing, with terms ranging between 5 years and lifetime being available. The key issue in appraising the use of fixed rates is the impact of break costs. These do not apply if the customer repays the loan due to an involuntary event (e.g. death or move into aged care), but will be charged at cost in the event of voluntary repayment.

If we take our example above. If we assume that from years 10 onwards the interest rate increased to 12% per annum then in year 20 the outstanding debt would have increased to almost $745,000 – an increase of 45%.

This uncertainty can be eliminated by taking out a fixed rate because the risk of a sharp rise in interest rates, and its resultant downside, will be eliminated.

Therefore if a client desires certainty about the amount of debt a reverse mortgage will accumulate, then they may be best to use a fixed rate for some or all of the loan. It should be remembered though that the customer will not owe the lender more than the value of the property due to the no negative equity guarantee, whatever happens to interest rates.

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How may funds be withdrawn?

Reverse mortgage clients can be split into four categories:

1. Capital needs – gifting to children or grandchildren, one-off house renovations, holidays, new car, clear up other outstanding loans or expenses, etc. These people would typically require a lump sum.
2. Income needs – These people will withdraw money by instalments. The ABN AMRO product enables them to do this monthly over terms of between 5 and twenty years. They can either receive the same amount every month or opt for the option to increase this amount by 2.5% per year over the term. Use the calculator to work out the maximum that is available to the customer.
3. Occasional income needs – 3. Occasional income needs. These people seek the flexibility to be able to draw money when they need it, so a flexible drawdown facility is appropriate. This works like a line of credit, with no interest charged on the unutilized facility, with minimum drawdowns of $1,000.
4. A combination of these three.

By using an instalment borrowing a client is imitating an income stream type product. By borrowing a lump sum and then investing it into an income producing product the client may be worse off if the interest on the amount outstanding compounds at a faster rate than the level of income received, plus there is the potential to impact on their pension entitlements.

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How does Centrelink Assess Equity released?

A different Centrelink assessment applies if the client is borrowing against their home or an investment property.

Income test – will not be effected if the proceeds are consumed immediately upon withdrawal. If the funds are placed into an investment product, then the income test that applies to that investment product will apply.

Assets Test

• Home – the first $40,000 is not counted for 90 days; amounts above $40,000 are counted immediately.
• Investment property – this $40,000 concession does not apply.

To this end, the monthly income or flexible drawdown options might provide a better solution.

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Key Questions

1. What impact will a reverse mortgage have on my clients' Centrelink benefits?
2. Has my client discussed the reverse mortgage with their beneficiaries?
3. Have I conducted a ranges of scenario tests and checked what happens with variable interest rates (assuming these have been selected), house price inflation, and allowed for the possibility that the client might want to repay the loan early?

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Case study

Bill Smith is a 74 year old widower. He has three children - two sons and a daughter.

He lives in Brisbane.

You have been his financial adviser for many years. His allocated pension has just run out of money. He has $30,000 in a cash management trust and owns $50,000 of shares.

He receives the full Centrelink aged pension.

He lives in a house worth $700,000.

He needs a new car and also has a few outstanding debts. After speaking to his children he decides to take out a Reverse Mortgage and takes out $30,000 immediately to buy the new car. He also uses the remaining money to receive $614 per month over the next 15 years to improve his lifestyle. This still leaves him a $70,000 flexible draw facility available for additional drawdowns as and when he needs them.

By doing this he ensures that his full Centrelink entitlements are not jeopardised.

Bill decided to borrow the funds himself because he preferred the independence and lower complexity. He did not want to come to an arrangement with one of his 3 children (he did not want any problems settling his estate when he died).

He sought independent legal advice and spoke to his three children privately and together before entering into the Reverse Mortgage product and they all supported his decision.

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How Are Loans Finalised?

The adviser or the customer will send in the completed loan application along with supporting documentation. These will be assessed and an instruction to assess the valuation of the property will be requested. After the valuation the customer will be required to obtain independent legal advice, confirming their understanding of the loan and its terms. After the completed loan documentation has been returned to ABN AMRO the loan will be advanced to the customer.

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Accommodation Bond Loans

ABN AMRO has developed this loan product to enable people to cover the cost of moving into aged care. In recognizing the significant cost usually associated with paying bond, this loan varies greatly from our Reverse Mortgage loan The three key differences of the ABN AMRO Accommodation Bond loan are:

• The borrower must be over 60
• You may borrow up to 40% of the value of the home
• The loan term is limited to a maximum of 5 years

The reason we have a relatively short term is to enable us to lend a larger sum than would be possible if applying standard loan for age ratios.

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Accommodation Bond Loans Product Summary

Minimum Amount	$20,000
Maximum	No maximum, subject to the assessed value of the security property
Minimum Age	60
Loan to Valuation Ratio	Maximum of 40 - subject to all borrowers being aged >60
Property restrictions	No retirement villages/resorts or transportable homes. Some postcode restrictions apply.
Negative Equity Guarantee	Neither the borrower nor their estate will owe more than the value of the property unless the borrower breaches the loan terms.
Insurance requirements	Current homeowners replacement insurance policy and landlord insurance if property is tenanted
Security	Registered first mortgage over residential property
Power of attorney	Applications under enduring POA are acceptable

Product Choices

Lump sum options	Fixed interest rate over 5 years Variable interest rate
Monthly income options	Variable interest rate over 5 years. Equal payments or 2.5% annual increase
Flexible drawdown options	Standard variable interest rate Draw funds as and when required up to an agreed limit

Borrowers may elect to take the loan in combinations of fixed and variable interest rates and combination lump sum, monthly income and flexible draw facility. In addition, up to 25% of the value of the home may be protected (maximum level of borrowing will be effected)

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Accommodation Bond Loans Set up costs

Application Fee	$700
Valuation fee	$300 for properties < $1m; $550 for properties > $1m; On application for properties > $2m
Independent legal advice	Costs borne by applicant
Mortgage Stamp Duty	Payable in some States

Once the loan is established

Further drawdowns/redraws	Minimum $1,000 (variable rate loans only)
Drawdown / redraw fee	$0
Repayments	None required until end of term or within 12 months of borrower passing away
Optional payments	Minimum of $1,000 (restrictions apply for fixed rate loans)
Discharge fee	$250
Fixed rate voluntary repayment	Economic cost
Post settlement variations	$250
Borrowers rights	No negative equity guarantee is a contractual right
Borrowers obligations	Must maintain property and buildings insurance

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Protecting Accommodation Bond Loans Clients Interests

• No negative equity guarantee
• Option to protect a percentage of equity
• Strongly recommend independent financial advice and discuss with beneficiaries and family
• Compulsory legal advice around loan documentation

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Investment Property Reverse Mortgage Loan

ABN AMRO has developed this loan product to enable people to release some of the equity trapped in their residential investment properties The key differences of the ABN AMRO Investment Property loan are:

• The borrower must be over 60
• The option of either a 5 year term or a 20 year term
• You may borrow up to 40% of the value of the home if taking up the 5 year option or standard LVRs apply if taking up the twenty year loan

The reason we have a relatively short term is to enable us to lend a larger sum than would be possible if applying standard loan for age ratios.

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Investment Property Reverse Mortgage Loan Product Summary

Minimum Amount	$20,000
Maximum	No maximum, subject to the assessed value of the security property
Minimum Age	60
Loan to Valuation Ratio	5 year term - Maximum of 40% providing aged over 60 20 year term - LVR according to age
Property restrictions	No retirement villages/resorts or transportable homes. Some postcode restrictions apply.
Negative Equity Guarantee	Neither the borrower nor their estate will owe more than the value of the property unless the borrower breaches the loan terms.
Insurance requirements	Current homeowners replacement insurance policy and landlord insurance if property is tenanted
Security	Registered first mortgage over residential property

Product Choices

Lump sum options	Fixed interest rate over 5,10,15 or 20 years (Cannot exceed term of loan) Variable interest rate
Monthly income options	Variable interest rate over 5,10,15 or 20 years.(Cannot exceed term of loan) Equal payments or 2.5% annual increase
Flexible drawdown options	Standard variable interest rate Draw funds as and when required up to an agreed limit

Borrowers may elect to take the loan in combinations of fixed and variable interest rates and combination lump sum, monthly income and flexible draw facility. In addition, up to 25% of the value of the home may be protected (maximum level of borrowing will be effected)

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Investment Property Reverse Mortgage Set up costs

Application Fee	$700
Valuation fee	$300 for properties < $1m; $550 for properties > $1m; On application for properties > $2m
Independent legal advice	Costs borne by applicant
Mortgage Stamp Duty	Payable in some States

Once the loan is established

Further drawdowns/redraws	Minimum $1,000 (variable rate loans only)
Drawdown / redraw fee	$0
Repayments	None required until end of term or within 12 months of borrower passing away
Optional payments	Minimum of $1,000 (restrictions apply for fixed rate loans)
Discharge fee	$250
Fixed rate voluntary repayment	Economic cost
Post settlement variations	$250
Borrowers rights	No negative equity guarantee is a contractual right
Borrowers obligations	Must maintain property and buildings insurance

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Protecting Investment Property Reverse Mortgage Clients Interests

• No negative equity guarantee
• Option to protect a percentage of equity
• Strongly recommend independent financial advice and discuss with beneficiaries and family
• Compulsory legal advice around loan documentation

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Frequently asked questions

For your information we have also list below the answers to the Frequently Asked Questions available to customers on the website and in the brochure.

FAQ - The questions everyone asks

1. How can I have a loan and not have to make any repayments in my lifetime - what's the "catch" - and will you be telling me how I can spend it?
2. What are your current interest rates?
3. What happens if I die or move into permanent aged care? Will you want your money back straight away, like in a 'fire sale', and who is in charge of selling my house?
4. Will my loan affect my children's and grandchildren's inheritance?
5. What about my pension or social security benefits? Will these be affected by my loan?
6. What if my home is already mortgaged?
7. Can I repay my loan at any time?
8. Who is ABN AMRO?
9. How and when do I pay this loan back?
10. Why don't I have to make any repayments prior to one of these events occurring? How does that work?
11. How does this loan make my life easier?
12. So how much can be released?
13. Can my Equity Release Plan ever exceed the value of my property?
14. Can I borrow more later on if I need?
15. Do I have a choice in the type of interest rate with my loan?
16. So I have the choice of a lump sum or monthly income plans?
17. How does the monthly income option work?
18. How does the flexible draw down option work?
19. Are there any restrictions on the flexible draw down option?
20. Do you have any fees or charges?
21. So there any no ongoing fees or charges?
22. Can I ever be forced to leave my home?
23. What if I move?
24. What if I choose to sell my property or move into permanent care?
25. What if my spouse dies?
26. So how will my loan be discharged?
27. Does this mean my family misses out on their inheritance?
28. How does the protected equity option work?
29. Are there any restrictions as to what I can do with the money?
30. Are there any conditions I must adhere to during the lifetime of my loan?
31. What if there is someone else living in my home?
32. What is the ABN AMRO Customer Enquiries line?
33. Why choose ABN AMRO?

How can I have a loan and not have to make any repayments in my lifetime - what's the "catch" - and will you be telling me how I can spend it?

There is no "catch". The principles of any reverse mortgage are that you are not required to make any repayments until you move out of the home on a permanent basis, e.g. into permanent aged care, or die. Interest is accrued over the length of your loan, but is added to the final repayment amount. As for how you spend it, ABN AMRO leaves that entirely up to you. Back to section top

What are your current interest rates?

As you are aware, interest rates fluctuate from day to day and are guided by the Reserve Bank, but we are determined to keep our rates as competitive as possible. Your financial advisor will have a copy of our current, low interest rates at the time of your application. You should also take into account the fact we have NO ONGOING FEES OR CHARGES when comparing our interest rates to other reverse mortgage providers. Refer to the Comparison Rate table for the current rate. Back to section top

What happens if I die or move into permanent aged care? Will you want your money back straight away, like in a 'fire sale', and who is in charge of selling my house?

Under the terms of your loan, you have a 12- month period within which to sell the security property and repay your loan. In the event of your death, we do not simply come in and take over the sale. The sale is left entirely in the hands of the Executor of your Will, or your family, depending on the details as set out in your Will. Once the property is sold, the loan and any interest accrued is repaid to us and the balance is divided according to the terms of your Will. Alternatively, your family could choose to keep the property and simply repay the loan. It is your choice. Back to section top

Will my loan affect my children's and grandchildren's inheritance?

Yes, it may, if you have decided that the proceeds from the sale of your property will be divided among your family. This is why we strongly emphasise the importance of discussing your decision to take out a loan with ABN AMRO with all your family members and any other beneficiaries. Remember, you have the option to protect up to 25% of your equity as well. Back to section top

What about my pension or social security benefits? Will these be affected by my loan?

They may, which is why we urge you to talk directly to Centrelink, who will advise you accordingly. Back to section top

What if my home is already mortgaged?

You must clear all debts against your property first. The outstanding balance of your mortgage would be repaid by your ABN AMRO loan. Back to section top

Can I repay my loan at any time?

Yes. However, Early Repayment Fees are applicable if you voluntarily repay completely within the first five years of a Reverse Mortgage and you may incur Break Fees if you voluntarily repay a fixed rate loan early. There are no early repayment fees on Accommodation Bond Loans or Investment Property Mortgages, but a discharge fee is payable on all loans.Back to section top

Who is ABN AMRO?

ABN AMRO is a prominent international bank, our history going back to 1824. ABN AMRO ranks eighth in Europe and 12th in the world based on total assets, with more than 4,000 branches in 53 countries, a staff of more than 99,000 full-time equivalents and total assets of EUR 1,120.1 bln (as at 1 November 2007). ABN AMRO has been established in Australia since 1971 and has offices in Sydney and Melbourne. Back to section top

How and when do I pay this loan back?

No repayment or interest is due during the term of your loan. The balance of your loan is repaid within 12 months of one of the following events occurring: 1) the borrower - or in the case of joint borrowers, the last surviving borrower permanently moves out; or, 2) the death of the borrower or, in the case of joint borrowers, the death of the last surviving and inhabiting borrower. You are free to repay the load at any time, but you need to check whether any early repayment or break fees apply. Back to section top

Why don't I have to make any repayments prior to one of these events occurring? How does that work?

The amount you have borrowed and any interest and fees are capitalised back into your reverse mortgage. This means that instead of making monthly repayments, this interest and fees, are simply added to your loan total. The final amount does not have to be repaid until one of the events listed above occurs. Back to section top

How does this loan make my life easier?

It allows you the financial freedom to do a range of things you may not be currently able to do and keep enjoying making more life memories. This could include increasing your monthly disposable income, renovating or re-painting your home, purchasing a new car, paying your grandchildren's university fees, or simply easing your day-to-day living. Back to section top

So how much can be released?

Unlike many of the similar reverse mortgage products currently available on the Australian market, ABN AMRO has NO MAXIMUM LIMIT. The amount you borrow through your loan is entirely up to you but is dependent on the value of your property and the age of the youngest borrower. The minimum amount you can borrow is $10,000. Back to section top

Can my Equity Release Plan ever exceed the value of my property?

The Sequal code of conduct states that the only basis that that the No Negative Equity Guarantee can default is in the event of fraud or malicious damage being caused by the borrower. ABN AMRO fully meets this code, so even if interest rates rise or house prices fall dramatically the amount of your loan will not exceed the value of your property. Back to section top

Can I borrow more later on if I need?

Yes. You may apply for further advances at any time. Further advances are subject to the same, original lending criteria and conditions. Back to section top

Do I have a choice in the type of interest rate with my ANB AMRO?

Yes. We offer you a choice between a Variable Interest Rate and a Fixed Interest Rate. This also allows us to offer you the choice of how you would like your loan released to you. Back to section top

So I have the choice of a lump sum or monthly income plans?

Yes. If you choose our Variable Interest Rate, you can choose to have your loan paid to you in a number of ways. These are: 1a) as a Lump Sum; 2) as a regular monthly income only; or, 3) a flexible drawdown facility. If you choose our Fixed Rate you can take your reverse mortgage as a lump sum. You also have the choice of our Fixed Rate periods of five (5), ten (10), fifteen (15), twenty (20) years or Life. Back to section top

How does the monthly income option work?

Using the "How much can I borrow?" calculator is the best first step. Put in the number of years you want to draw down money over; then decide whether you want equal instalments or the amount to increase by 2.5% per year. The maximum will appear, then you can enter the amount required Back to section top

How does the flexible draw down option work?

You can decide how much you would like to borrow at the time the loan is set up. it is then up to you to decide when you want to draw your money, with the only condition being that it must be a minimum of $1,000 each time. Back to section top

Are there any restrictions on the flexible draw down option?

The initial limit is agreed at the time of the loan and is then available for ten years. The limit may be reduced if the value of your property falls which is assessed every three years. Back to section top

Do you have any fees or charges?

Naturally, interest is accrued monthly on your loan and you will need to pay for your initial valuation ($300) plus your own legal fees. Apart from that we have no ongoing fees and charges although, should you decide to voluntarily repay your loan in the first 5 years you will incur a repayment fee. Fixed rate loans may incur Break Fees, while if you change the structure of your loan there may be a fee of $250. Back to section top

So there any no ongoing fees or charges?

That's right. We do not have any ongoing monthly fees or charges. The only instance in which you will incur a fee is if you decide to voluntarily repay your loan in the first 5 years, or if you voluntarily repay a fixed rate loan during its term or if you request a change to your loan. There is a discharge fee at the end of the loan. Back to section top

Can I ever be forced to leave my home?

No, you can continue to live in your property for as long as you like, as long as you carry out essential maintenance and maintain the buildings insurance policy. Back to section top

What if I move?

As long as you meet with our criteria at the time of your move, you may be able to transfer your loan to your new home. You will need to discuss things with us in advance of any move. Back to section top

What if I choose to sell my property or move into permanent care?

You are not restricted and you can sell at any time. Once your home has been sold, your reverse mortgage will be discharged at settlement and the balance of funds from the sale given back to you. If you move into care you also have the option to use our Accommodation Bond Loan or Investment Property Mortgage, so you do not have to repay the loan automatically - call our enquiries line 1800 99 99 59 if this need arises. Back to section top

What if my spouse dies?

You can continue to reside in your home for the remainder of your life or until you decide to permanently move, assuming the property is also in your name. Back to section top

So how will my loan be discharged?

Your loan is paid out by: 1) the amount owing is taken after the sale of your property; or, 2) other means - such as beneficiaries of your estate who choose to keep the property and refinance the balance owing. Back to section top

Does this mean my family misses out on their inheritance?

No. Once the property is sold and the amount owing on your loan has been paid out, you remain free to distribute any remaining sale money to whomever and however you choose. This amount will depend on how much you have borrowed and is affected by housing price growth, the duration of your plan and market interest rates. We highly recommend however, that you discuss your decision to choose one of our reverse mortgage products with family members and any other beneficiaries. Back to section top

How does the protected equity option work?

You can decide that up to 25% of your equity is protected and so when it is sold that percentage is returned to you before repaying the loan. It will reduce the amount you can borrow, but there is no fee for this option and it does mean that you will definitely have some money left when the loan is repaid. Back to section top

Are there any restrictions as to what I can do with the money?

No. You can spend it however you want. Back to section top

Are there any conditions I must adhere to during the lifetime of my loan?

Yes. The borrower(s) must live in the home. It is a condition of the loan that your home is properly maintained during the term of your plan as this affects its market value. We will organise for a non-intrusive property valuation every three (3) years. The property needs to be insured by you and you must continue to pay all rates due. Back to section top

What if there is someone else living in my home?

Friends and family are entitled to live with you but as they are not the nominated owner or borrower they can have no rights or interest in your property. Back to section top

What is the ABN AMRO Customer Enquiries line?

1800 99 99 59. This will connect you to your local expert. Back to section top

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Why choose ABN AMRO?

If the above features haven't convinced you, we have also won numerous awards in the last 12 months from independent product experts. These have included Money Magazine (Best Bank Reverse Mortgage 2008), Your Mortgage Magazine (Best Bank Reverse Mortgage 2007) and both Smart Investor Reverse Mortgage Awards in 2007. Back to section top

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