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Consumer Protections

Reverse Mortgages are the most heavily legislated and regulated financial products in Australia.

All Reverse Mortgage loans have been legislated by the Federal Government in the National Consumer Credit Protection Act 2009 (NCCP) and are regulated by the Australian Securities and Investment Commission (ASIC).

  • No Negative Equity Guarantee

    The Legislation mandates that the amount of your loan which is to be repaid shall not exceed the sale value of the Security offered. This means the borrower can never owe more, at the time of the loan repayment, than their home is worth no matter how long they have the loan.

  • Independent Legal Advice

    ASIC requires all borrowers, or their representatives, receive independent legal advice on the terms and conditions of the Loan Document.

  • Projections and Forward Estimates

    Based upon the loan parameters and other influences, and the provision of such forecasts. The NCCP mandates a forecast is provided to borrowers, or their representatives, on the future net equity based upon loan parameters. This forecast comes from ASIC money smart website.

  • Reverse Mortgage Information Statement

    Legislation mandates all borrowers, or their representatives, receive a “Reverse Mortgage Information Statement”.

The percentages of the value of the property allowed to be lent to borrowers are set by ASIC regulation under the NCCP.

A Reverse Mortgage does not need to be repaid until the last borrower permanently leaves the home. This includes death, sale, moving in with children or into aged care. The lender can never ask for a payment before this time. However, if a client does wish to make payments, they are able to do so at no extra cost.

As brokers we participate in the ASIC approved External Dispute Resolutions Scheme – AFCA Australian Financial Complaints Authority.

The Reverse Mortgage borrower is also protected by the brokers Best Interest Duty (BID). Implemented after the Banking Royal Commission, this means we must act in the best interest of the client, and we must be able to justify we have acted in the best interests of the client. This can be audited by ASIC and we are made to justify our lending choices.

Reverse Mortgage clients are also protected under Australian Consumer Protection Laws, Regulations and Codes of Conduct.

Written by ASIC

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