As a pensioner, sometimes it can be tough to make ends meet. Unexpected bills or cost of living increases in energy costs and groceries can have a devastating impact on anyone living on a limited or fixed income.
For seniors in Australia who need to access supplemental funds, a Pensioner Loan Scheme could offer some financial relief.
There are a few requirements that must get met to qualify for a Pensioner Loan. Most importantly, the applicant(s) must own real estate and be aged 65 or older to meet the most basic requirements. Individual income and age pension resident status must also get reached as a condition of the Pensioner’s Loan.
Borrowers are responsible for paying all fees and costs associated with taking out a Pensioner’s Loan Scheme. Including origination fees and interest charges which at the time of this writing were 5.25% compounding interest based on the outstanding loan balance.
Part-rate pensioners and some self-funded retirees who own real estate in Australia can qualify for this lending scheme to help pay for unexpected bills or expenses.
With this type of loan, the sooner that you pay it off, the less you pay in interest, so it definitely should not be used as a way to solve long-term financial issues.
More About Pensioner’s Loans
A Pensioners Loan is a non-taxable loan that can get used if you need short-term or indefinite financial assistance or extra income.
Borrowers who get approved for this loan have the option of making partial payments or may pay the mortgage off in full with a single payment if they so choose.
It’s also worth noting that having an outstanding Pensioner’s Loan could complicate things if you’re thinking about putting the home or property up for sale. In fact, people with outstanding loans of this variety must first contact the lender before placing the property on the sales market.
Pensioner’s Loans work as a “Reverse Mortgage.” Instead of owners having to sell their home to raise funds, a Pensioner’s loan offers real estate owners a way to access money using the value of their home or property as collateral.
If the borrower passes away while the loan is still active, the balance of the loan including interest and fees gets collected from the estate, so there is minimal risk in making this type of short-term loan to pensioners.
Understand the Terms of the Agreement
If you have a cash flow crunch and you own a home or property in Australia, a Pensioner’s Loan could be a convenient solution to your temporary money problems.
As with making any new financial or loan agreement, you should always take the time to conduct your ‘due diligence’ before signing your name on the loan agreement. To avoid problems or misunderstandings later, make sure that you understand all the terms of the loan at the very beginning. If you have questions, be sure to ask them. The more you know, the better you are!
Other Loan Options for Pensioners
If you don’t fit the criteria for the pensioner loan scheme or don’t feel it’s the right type of loan option for you, there are alternative financial products.
Learn more about different low cost loans available to pensioners here.