ARE YOU over 60 years and still ready to rumble? Is day-to-day living difficult for you? Are your children independent of you? Is your roof leaking and too expensive to fix? In fact, does your house need a makeover? Is your car starting to rust? Is the daily cost of living getting you down because your pension is like the modern way of youths wearing their pants? Are you and your partner in need of a holiday or a cruise? Can you afford the imminent doctor’s bill? Would you like to live independently of the assistance of your children?Well, if you are any of these, or even more, this article is meant for you.The reverse mortgage is not for everyone. If you are asset-rich but cash-poor you should consider it.Generations change as generations progress. My parents often said: “I want my children to have a better life thanI have had.” My parents received no secondary or tertiary education, but worked hard to accumulate wealth that they wished passed on to their children. They did it in three ways: (a) by saving, (b) by property and (c) by investing in their children’s education. Many parents today are doing the same thing because the process is not exhausted, and there are still parents who wish to see the fruits of their labour inherited by their children. But even with a reverse mortgage this is still possible.
Qualtity of lifeOn the other hand, there is a growing sector of our society who have worked and educated their children to such an extent that their children are independent and well taken care of. These folk, as the years go by and as their pension or investments dwindle, because of the rising cost of living, need to look seriously at their quality of life. Today folks are living longer, even though medication may be needed for various ailments. You can even get a hip replacement nowadays.Imagine that you are 70 years old and in the position of paragraph one above. You go to a bank and ask for a loan of $200 000. The banker, who is 30 years old, asks you how are you going to repay. You say: “$1 700 per month.” He asks from what source? You say: “My pension.”The young man asks you: “How much is your pension?”You tell him: “$2 500 per month.” He says: “That would take 30 years.” Then he asks you a very strange question:“Do you know who will be Governor General then?” He leaves you, presumably for a few minutes. Aftera while his secretary peeps around the door and you ask: “Where is the bank manager?” And she says: “He gone to lunch; he thought you were joking.” But in all seriousness, BARP (Barbados Association of Retired Persons) is advancing the case for reverse mortgages. Of course, their 25 000 members have a vested interest in seeing it introduced. I am sure that the net is wider than the membership of BARP. The reverse mortgage is a further form of total involvement of the some of the elderly in the social and economic fabric of the country. In this way they not only contribute to the savings aspect of the economy, but alsoto the borrowing. The financial community needs to look seriously at this meaningful sector. It is growing, and times are changing.BARP meanwhile is examining the legal implications and applications of this type of instrument in order to make it acceptable to the Barbados requirement, both for the lending institution and for the borrower. The financial crisis is far from over. In fact it is taking on an ominous face, and the cost of living will continue to rise. The recent incidents in Greece are but warnings to us of overspending on social enterprises and overborrowing. Greece has a 115 per cent deficit to GDP, what is ours? Like Greece we are heavily dependent on tourism.Harry Russell is a former banker. [email protected]
