ASIC reviews reverse mortgages

ASIC has conducted a review and urged the promoters
of reverse mortgages to ensure their advertising and promotional
material is clear and not misleading.

ASIC found five cases of misleading advertisements that made claims suggesting that reverse mortgages did not need to be repaid.

ASIC raised these concerns with the promoters of the
advertisements. In each case the promoter took immediate steps to
either withdraw or amend their advertising.

The statements used in the advertisements included:

  • ‘There are no repayments’, ‘…no loan repayments ever’ and ‘No need to
    make repayments!!’.

Although reverse mortgages do not usually require
the borrower to make regular repayments, they certainly require
repayment. Typically, a reverse mortgage will need to be repaid when
the home is sold or no longer occupied.

  • ‘Centrelink payments aren’t affected’.

ASIC considered that this claim could be misleading
as taking out a reverse mortgage may affect a consumer’s Centrelink
payments, depending on their individual circumstances and how they use
the money they receive.

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