Unlike a normal loan, you don't have to make any repayments until you sell, move out of the home or die. The total amount you owe must then be paid back to the bank, usually from the sale of the house. Your debt will be considerably higher than the original amount you borrowed, as each year the fees and interest are added to the loan.
If you are a joint owner of the house, the loan will be in both names and will continue as long as one owner lives in the house.
The amount you can borrow is calculated on your age and the value of your home. These loans are intended to allow some residual value in the property at the termination of the loan. However, this is dependent on a number of factors, including the number of years the loan remains in force, the amount you borrowed and the growth in value of your home.
The lender may periodically re-assess your home to ensure that its condition has not deteriorated and that the loan has not exceeded the value of the property. You will be kept up to date with the state of your loan via regular statements.
While historical data and trends indicate that your property is likely to continue increasing in value for the life of your loan, this is not a certainty. Nor are you likely to be able to predict how long you will live in your home. There is a possibility that the loan could eventually equal or exceed its value. If this happens, the lender may then ask you to commence repayment.
Terms and conditions vary between lenders so it is wise to shop around.
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Information on copyright for the Office of Consumer and Business Affairs website is provided on behalf of South Australia Central http://www.sacentral.sa.gov.au/site/page.cfm?u=60
Disclaimer
Information on the disclaimer for the Office of Consumer and Business Affairs website is provided on behalf of South Australia Central http://www.sacentral.sa.gov.au/site/page.cfm?u=61
Privacy
The South Australian Office of Consumer and Business Affairs (OCBA) is committed to protecting your privacy and the confidentiality of your personal information, consistent with the South Australian Government's Information Privacy Principles. If you would like to view the full privacy statement please visit: http://www.ocba.sa.gov.au/privacy.html
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