Seniors benefit as Commonwealth Bank removes mortgage fee
THE Commonwealth Bank of Australia announced this week the removal of its reverse mortgage product monthly fee.
Customers will be advised of the immediate removal of the Equity Unlock for Seniors product monthly account fee of $12 when they next receive an account statement.
The EQFS product, or reverse mortgage, is set up for older Australians aged 65 and over to access the equity in their home to supplement their income.
A reverse mortgage product is a loan which doesn't require repayments. The monthly fees are debited to the loan account, but the borrower doesn't have to make regular repayments. However, the interest and product fees compound on the loan so the balance can increase significantly. It has to be repaid when the borrower sells the house or dies.
The loan is often used for a variety of personal expenses including home maintenance or renovations, or medical treatment.
The Commonwealth has more than 12,000 seniors who are currently accessing its EQFS.
The bank found from its customer feedback that concerns over this account fee are raised more often than many other home lending products.
The Commonwealth's executive general manager of Home Buying Dan Huggins announced the bank is removing the fee to make the accounts more affordable for seniors.
"We know that seniors using this product often find the fees difficult, which is why we've listened and taken action," Mr Huggins said.
"Many of these customers are seniors enjoying their well-earned retirement and we believe that removing extra costs like this from their budgets will be warmly welcomed."
National Seniors chief executive Dagmar Parsons said many seniors wanted to remain in the homes and communities where they'd raised their families, and reverse mortgages were one way they could access the equity in their house to help fund their retirement lifestyle and aged care support services without selling up and moving.
"We know many older people are reluctant to leave the homes they've lived in for years and sometimes decades," Ms Parsons said.
"We support moves like this one that will assist them to stay in familiar surrounds in comfort, rather than being asset-rich and cash poor.
"We encourage other providers with similar fees to get rid of them, too."