St George Bank Seniors Access Home Loan

If you are over 63 then St George Bank has a product that may be just what you are looking for. St George was founded in 1937 as a housing based financial institution and has built a reputation as one of Australia's foremost building societies, before achieving full banking status in July 1992.

St George is now Australia's fifth largest bank and one of the top 15 publicly listed companies in Australia, employing over 8,500 people. Its national operations span all aspects of the financial industry including retail banking, institutional & business banking, and wealth management.

St George is now offering a Seniors Access Home Loan. However, be aware that this is not a home loan in the traditional sense, but a reverse mortgage. The St George Seniors Access Home Loan is an innovative home loan designed especially for seniors, allowing you to access the equity in your home and still enjoy all the benefits of living there.

The Seniors Access Loan is a variable rate home loan that is secured by a mortgage over your owner-occupied property. You borrow against a portion of the equity you have in your home, while still enjoying all the benefits of living there.

During the term of the loan, all interest charges and other fees and charges are added each month to the balance owing on the loan. This is known as "loan capitalisation", which means that you pay interest on interest, and the outstanding loan balance increases over time. Repayment of the total loan amount is deferred until the property is sold, or the borrowers are no longer living in the house, or all borrowers are deceased.

When one of these events occurs, the outstanding loan amount must then be repaid in full. If you wish, however, you may make payments on the loan at any time at a St George branch or via Phone and Internet Banking. To be eligible to apply for the St George Seniors Access Home Loan, all applicants must be 63 years or older and must own the home outright.

The minimum loan amount is $10,000 and the maximum loan amount available will vary depending upon the ages of the homeowners, as well as the value of the property. If you are 63-69 years old you can capitalize your equity to the value of $150,000 or 15% of the value of the property, whichever is the lower. If you are 70-79 years old you can access $200,000 or 20% of the value of the property and if you are 80+ years it is $250,000 or 25% of the value of the property.

This is great if you want to stay in your own home but are having trouble financing your retirement, especially if you have no future beneficiaries. However, be very aware of the complications of interest on interest loans. Doing this is in effect procuring a compounding debt that with the sale of your home may mean that St George owns more then the 15 to 25% of its value that you borrowed against. But if you're a little strapped for cash in your retirement, St George Seniors Access Home Loan may be the solution for you!

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Published on December 12-th, 2007 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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