Journal of Mathematics and Statistics

Rental Estimation of Reverse Mortgages (RM): The Case of Home as Rental in Retirement

Gurudeo Anand Tularam and Ali Abdullah Al Ibrahim

DOI : 10.3844/jmssp.2018.40.51

Journal of Mathematics and Statistics

Volume 14, Issue 1

Pages 40-51

Abstract

The aim of this paper was to compare the rental market conditions in retirement with an RM contract that involves a retiree’s home and its valuation. It is noted that the current rental market conditions are to be examined thoroughly before any engagement in RM is to be instituted. The rental value per week for 1, 2-Bedroom Units and 3 or more Bedroom homes are to study in some depth. The availability of rental housing should also be studied to determine whether it is indeed possible to obtain secure longer term rental housing for the retired persons. In this study only a certain group has been investigated and further work is necessary if RM is to be a major contract that retired persons may engage in thus achieving a better quality of life after retirement given the many years of service couples have given to their country. The lack of engagement in Australia is a two way story in that the less than usual interest of retiree’s on RM is met by the banks very low level of advertising of the same. The lack of information has created a lack of trust in RM; the thought of letting someone else own apart of one’s home towards the later part of one’s life in some manner is not well accepted or understood given the retiree’s home is mostly a mortgage free asset. The modelling and analyses conducted in this study show that the return in terms of rental is well in competition with the existing rental market in Australia and in particular when using the largest city data from Sydney and other rental markets.

Copyright

© 2018 Gurudeo Anand Tularam and Ali Abdullah Al Ibrahim. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.