WILD COOT: Reverse mortgages
NOW THAT THE stage is set and all the aspects of reverse mortgages examination have been explored, members of the Barbados Association of Retired Persons (BARP) are ready to enjoy a long expected relief from the pressures of the existing cost of living and economic strictures.
Reverse mortgages are now available with banks, credit unions, finance houses and insurance companies who want to participate. The 37 000 odd members, many of which own their own homes, can breathe a sigh of relief. They can now exchange the equity in their homes for house repair, a new car, a trip abroad and the ability to comfortably meet monthly bills or help children or grandchildren with business or education.
The committee has had the go-ahead from the Central Bank – God please bless it, which views reverse mortgages as a welcome player on the money market for citizens who have sacrificed all of their working days to save by way of home ownership. Many homes purchased 25 years ago have tripled their value in the ensuing years and provided people with an alternative way of husbanding a nest egg. They now have the benefit of cashing in on that nest egg in times of difficulties.
Some banks or entities may be slow to get on the bandwagon, but in a market where opportunities to lend at profitable rates are few and far between, the reverse mortgage provides a service to a growing and reliable sector of the society with minimum risk. This is especially relevant to credit unions whose profitability will be heavily taxed by the recent move by the Financial Services Commission.
The permutations available to the lender are numerous. For example he can lend both principal and interest, thus guaranteeing that he gets interest, or he can lend in other forms and stipulations. Above all, he has the security of a property that will be insured and that he can inspect from year to year as its value appreciates.
Even so the banker never has the title transferred into his name at any time and can offer a forward mortgage to likely inheritors if and when the mortgagee deceases.
Membership of BARP is expanding daily as the many benefits of being part of the association increase. Of course the great benefit is the discount offered by participating merchant partners, but benefits are not only confined to discounts from stores.
There are discounts for service and there is the overall function of being part of an elite group of people of a generation that is viewed throughout the Caribbean as unique and of the highest quality.
BARP is continuously extending its outreach on behalf of its members, and reverse mortgages, now available, is the pièce de resistance that is scheduled to make life extremely tolerable and put in place for the banks and the country as a whole, an added step in its climb up the ladder of healthy and comfortable living for an ageing population.
Some institutions have already indicated their willingness to participate. They are aware of the guidelines that should accompany this commitment on the part of both the institution and the customer in seeing that the customer is well advised of the ramifications and terms of this worthwhile step.
Such things have already been conveyed to the public and potential mortgagees are reminded that they must be properly advised before making this decision. BARP is always open to its members to provide general information on this exciting opportunity.
The committee wishes to thank the public for its patience in seeing this opportunity come to fruition.
• Harry Russell is a banker.