As Australia's reverse mortgage market skyrockets, retirees are urged to seek informed advice before making decisions over their options, according to Sydney Wide Investments Mortgage Manager (SWIMM) managing director Tim Stoyles.
"At the moment, the reverse mortgage market is around $1 billion-$1.5 billion, but more growth is expected, with projections of up to $15 billion in the next five years," Stoyles said.
"The figures we've seen show it is growing at 50 per cent per annum compared with previous years."
According to Stoyles, the rise in reverse mortgages stems from baby boomers struggling to retire and living off the superannuation they have.
As a result, seeking professional financial advice before making decisions is of the utmost importance.
"The statistics I have seen show that 40 to 50 per cent of reverse mortgages are sold by mortgage brokers," he said.
"The danger with this is that because brokers are paid trail commission on the debt, it is to their advantage to have a higher debt load when selling it."
"There is a bit of industry concern that it is being sold inappropriately as a lump sum for higher trail commission to inappropriate parties."
To tackle the issue, the financial planning enterprise has founded a reverse-mortgage consultancy.
The consultancy aims to provide a range of alternative options, as well as informed advice on how people can use reverse mortgages appropriately.
