Best reverse mortgage providers named
By Darin Tyson-Chan
Monday 28 April 2008
ABN Amro and Bluestone were the only reverse mortgage providers to receive a 'superior value' rating from research house Cannex in its latest review of the sector.
The two firms were awarded the highest rating due to their ability to offer competitive interest rates while maintaining their flexibility for clients as well as safety features.
"ABM Amro offers no less than 12 reverse mortgages, with many fixed and variable interest rate options to choose from. While Cannex acknowledges that interest rates are important, the features these loans offer are just as important for retirees," the report said.
"Bluestone also offers various capped interest rate loans with different pricing structures for lump sum drawdowns and instalments. Bluestone's suite of products is smaller but just as strong on features. Bluestone also offers Committed Funding on instalments which means the loan will always be honoured, even if the value of the property drops," the report added.
The study assessed a total of 55 reverse mortgages that were provided by 14 institutions.
Furthermore it looked at the differences between taking out a reverse mortgage as a lump sum as opposed to a smaller more frequent income stream.
From this perspective the ratings house warned consumers to be careful about the consequences and the differences in each use.
"If you choose a lump sum, you will pay interest on the amount straight away, whereas if you spread the same amount out in instalments over time, your exposure to the compounding effects of interest is much less dramatic," Cannex financial analyst Lauren Newlands said.
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