Addressing a well attended monthly meeting of the Edgar Cochrane Polyclinic Men’s Health Group, broadcaster and ex-banker Tony Marshall explained Reverse Mortgages and their potential for releasing funds to those who are ‘asset rich and cash poor’.  Marshall is Chairman of the Barbados Association of Retired Persons (BARP) Advisory Committee on Reverse Mortgages which is spearheading efforts to put in place the necessary legislation and regulations in order for Reverse Mortgages to become a legitimate financial product available in Barbados to those who qualify.

Put simply, a Reverse Mortgage enables the owner/occupier of a house to draw down on a loan based on the value of the property which does not have to be paid back until the owner/occupier dies or moves out of the property permanently.  When the owner/occupier dies, their beneficiaries have the option to sell the property and pay back, out of the sale proceeds, the outstanding loan and interest, or perhaps convert the Reverse Mortgage into a regular, or Forward Mortgage. 

Whilst a Reverse Mortgage may not be appropriate for everyone, Tony Marshall is a firm believer that they should be available as an option, and one of the challenges of educating the public about the product is dispelling the myths which abound.  “Some people believe that the bank will own the property if they take out a Reverse Mortgage, which is just not the case”, explains Marshall. He also highlights the concern of others that they will be leaving nothing to their children.  “In the majority of cases, the sale value of the house after the death of the owner/occupier will exceed the outstanding balance of the loan and interest, so people needn’t lose any sleep thinking that their children will be left penniless!”

“In the present economic climate when the same older people who own their properties outright are struggling to meet their living expenses or medical bills, it makes no sense at all for them to live out the remainder of their lives in misery when there is a tried and tested financial product available in countries including the US, Canada, the UK and New Zealand which could transform their retirement years into a more financial comfortable time of their life,” says Marshall.

The meeting was one of a number of sessions which will continue to offer information and answer questions about Reverse Mortgages.  Meanwhile,  preparation of the appropriate legislation is well underway and the BARP Advisory Committee hopes to present a draft paper to the Ministry of Finance later this year.

A most useful document produced by the AARP (American Association of Retired Persons) can be downloaded from the AARP website  << HERE >>