Introducing an attractive HELOC alternative for older-adult clients who own high-value homes.
Many clients who are retired—or close to it—want to stay invested and have the available cash to live the lifestyle they desire. Many of these clients will choose a HELOC to get the cash they need—and although HELOCs can be a good financial option for some, it wasn’t designed with seniors in mind. Longbridge Platinum was.
Longbridge Platinum, the HELOC substitute for seniors.
Longbridge Platinum is our non-Federal Housing Administration (FHA) reverse mortgage program for borrowers with high-value homes or condominiums that may not qualify for a traditional Home Equity Conversion Mortgage (HECM). It allows clients to access more available funds as compared to a traditional HECM—up to $4,000,000.
Plus, our new line of credit option compares favorably to a standard Home Equity Line of Credit, with more flexibility and no monthly mortgage payments required.2
As compared to a HELOC, a Platinum Line of Credit features:
- Low upfront costs
- Comparable rate
- Easier income qualification
And here’s where the Platinum Line of Credit really gives your clients the gold:
- No required monthly mortgage payments2
- A reusable line of credit, up to 75%3
- All the borrower benefits and safeguards of a standard reverse mortgage program
Age Qualifications Expanded
Now open to more clients: age 55+*
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| PLATINUM LINE OF CREDIT VS. STANDARD HELOC: A CLOSER COMPARISON. | ||
|---|---|---|
| Platinum LOC | Standard HELOC | |
| Ownership | Both types of loans allow your clients to own and keep the title of your home | |
| Payments | No monthly mortgage payments required2 | Requires monthly mortgage payments |
| Interest deduction | Clients can deduct the interest, if optional payments are made | Clients can deduct the interest |
| Payoff and redraw | Clients can access up to 75%3 of the Principal Limit during the first 10 years—with the ability to redraw repaid principal amounts | Clients can pay off and redraw during the first 10 years, but there may be a penalty |
| Rate adjustments | Every three months | Every month |
| Payback deadline | None, as long as clients meet the terms of the loan and remain in their home | Typically comes due after 10 years |
| Prepayment penalty | No penalty for early repayment | Prepayment penalties can be charged in some cases—ask the lender |
| Non-recourse loan protection | Clients and their heirs aren’t personally liable if the loan amount exceeds the home value when it comes due | No such protection |
| Counseling | Independent, Platinum-approved counseling helps clients fully understand their options | No independent counseling provided |
| Qualifications | Clients must be homeowners age 55+* and use the home as their primary residence | Clients must qualify based on credit score and income |
Put the power of Platinum to work for your clients now—and keep their investments working longer.
By incorporating a retirement strategy specifically for clients with higher-value homes, you can help them unlock their home equity and extend the life of their retirement assets.
Clients can reap all the benefits of a reverse mortgage, and leave higher-performing investments to grow over time—while using the proceeds to:
- Eliminate monthly mortgage payments2
- Generate a lump sum that’s tax-free1 to use for home renovations or repairs, medical expenses, and more
- Use the line of credit option to set up a financial “safety net” for the future
- Refinance an existing reverse mortgage to get more available cash
- Buy a house or condo that’s a better fit for their retirement needs
Platinum delivers a long list of borrower benefits:
- More available cash as compared to a traditional HECM
- Fixed-Rate Program for clients looking for a full-draw loan at a low, fixed rate
- NEW Line of Credit Program for clients who want some upfront cash now—and a reusable line of credit for the future
- Attractive low-rate options
- No mortgage insurance premium = lower upfront costs
- Non-recourse protection = no personal liability
- Greater flexibility and fewer restrictions
- Expanded eligibility for condos
- Streamlined approval process
Answers to common questions clients ask about Longbridge Platinum.
What is Longbridge Platinum?
It’s a proprietary, non-Federal Housing Administration (FHA) reverse mortgage program for homeowners age 55 and older* with a minimum home value of $450,000. It lets them borrow against their home equity without having to make monthly mortgage payments. They must continue to pay property taxes, homeowners insurance, and maintain the property.
How does it compare to an FHA Home Equity Conversion Mortgage (HECM)?
While subject to the same regulatory requirements as HECM loans, there are some important differences. Longbridge Platinum allows clients to access more of their home’s equity than a standard HECM—up to $4M. It’s specifically for properties with home values that exceed the FHA loan limit (currently $1,089,300), or aren’t eligible for FHA financing—such as condominiums that aren’t FHA approved, or some Planned Unit Developments. Compared to a HECM, Platinum has low upfront costs and no mortgage insurance premiums, which can save clients thousands over the life of the loan.
Is this program “safe” for senior homeowners?
Longbridge Platinum has borrower protections similar to standard reverse mortgages. No matter what happens in the economy, how much money they receive, or how long they live in their home, they won’t be required to make a mortgage payment. Plus, Platinum is a non-recourse loan—the lender cannot hold your client or their heirs personally liable, even if the loan amount exceeds the home’s value when the loan comes due.
If clients take a Longbridge Platinum loan, will they still own their home?
Yes. They retain the same ownership and title that they have today. Just like a traditional “forward” mortgage, the lender simply puts a lien on the property—which is paid off when the clients sell their home, or when the last borrower no longer lives in it. Heirs can inherit the house, just as they would with any other mortgage, and can decide how to repay the loan.
How does Longbridge Platinum compare to a conventional “forward” mortgage?
With a standard mortgage, clients must make monthly payments to the lender, eventually paying off the mortgage over time. Longbridge Platinum lets seniors receive a lump sum of cash at closing with two options: with no initial-draw limits, or with some cash up front and the rest in a reusable line of credit. As long as they live in their home, they never have to make a monthly mortgage payment. However, just like a conventional forward mortgage, they must continue to pay property taxes, homeowners insurance, and for home maintenance.
How can clients use the money they receive from Longbridge Platinum?
They can use it in any way they wish. It’s non-taxable and typically does not affect Social Security payments. We always recommend that clients talk to their advisors to determine the effect on any other benefits they may be receiving, especially when receiving a large lump sum from a reverse mortgage at closing. Having excess funds in their account could impact eligibility for certain government benefit programs.
When does the loan have to be paid off?
The loan comes due when the borrower 1) sells the property; 2) no longer lives in the home as their primary residence; or 3) if they fail to meet one of the requirements of the loan—such as paying property taxes, homeowners insurance, and home maintenance.
What are your clients’ obligations under a Longbridge Platinum reverse mortgage?
Since they retain the title to their home, they also retain their obligations as a homeowner—such as paying property taxes and insurance, and any other assessments that may be applied to their property (e.g., homeowners association fees).
Will your clients’ heirs still receive an inheritance?
Yes—after the balance of their Longbridge Platinum reverse mortgage is paid off, any remaining equity goes to their heirs. That amount will depend on a number of variables, such as loan balance, how long they stay in their home, how much the home appreciates in value, and other factors.
1 Clients should consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits.
2 Real estate taxes, homeowners insurance, and property maintenance required.
3 Except for the first 25% taken at closing.
4 If part of your client’s loan is held in a line of credit, they can draw from it for a period of 10 years.
*Due to state requirements for the states of Louisiana, New Jersey, and Washington all borrowers must be 60 years of age and in North Carolina, Texas, and Utah all borrowers must be 62 years of age.
