Retirement village residents are being unfairly locked out of reverse mortgages, says Dandenong man Bob Barrett.
Mr Barrett is calling for state law reform or a “tweak in the rules” so he can access his home’s equity to help his daughter into the otherwise “out of reach” property market.
He says his neighbours at Valley Village Mews are also supportive, out of a need for a “better quality of life”.
They could put the cash to a “myriad” of benefits, such as holidays and medical expenses, he says.
“I realise that some rules and regulations may have to be altered but the results would be a game-changer for all concerned and the economy in general.
“It doesn’t hurt anybody and it helps everyone.”
Mr Barrett says despite owning his home, he’s unable to access its equity due to a caveat.
The caveat is designed to ensure that Valley Village Mews fees are covered when the property is sold, he says.
“But that still leaves many hundreds of thousands of dollars left over.
“Some residents have considered selling because of this silly situation.”
Another issue is that lenders reportedly won’t issue reverse mortgages because retirement-village residents may own their homes but not the freehold.
Ben Rogers, who is CEO of Council on the Ageing Victoria and Senior Rights Victoria, says a solution should be found for retirement village-residents who are often “asset rich but cash poor”.
“Retirement villages can be a great housing option for older Victorians – but they may not be the right choice for all.
“We understand the frustration many older people in retirement villages feel when they are unable to access the value of their home through reverse mortgages or similar options.
“Due to the way in which retirement villages are set up, and the way lenders assess risk, residents can often find themselves asset-rich but cash-poor.”
Rogers said the aim should be to meet residents’ financial needs without undermining the stability of retirement villages, or increasing their risk of elder abuse.
“Looking at different ways to unlock equity, along with access to independent financial advice, are important steps towards that balance.”
The State Government was contacted for comment.
