Stay in the home
Do you have to sell?
The main appeal is accessing equity without moving. For people deeply attached to their home and community, that can matter more than the financial detail.
REVERSE MORTGAGES
Releasing equity later in life
A reverse mortgage can fund retirement without selling the home. It also compounds, which is the part that deserves the most attention.
IN SHORT
A reverse mortgage lets older borrowers draw on home equity without repayments
You borrow against the value of your home, and instead of making monthly repayments, the interest is added to the loan balance. The debt is generally repaid when the home is sold, when you move into aged care, or from your estate.
Because nothing is being repaid along the way, the balance compounds — the interest charged in later years is calculated on earlier interest as well as on the original amount. Over a long period the effect is significant.
Regulated reverse mortgages in Australia carry a statutory no negative equity guarantee, meaning you cannot end up owing more than the net sale proceeds of the property. That is a meaningful protection, and it does not remove the need to think carefully.
WHY IT HELPS
What it can do
No negative equity guarantee
Can you owe more than the house is worth?
Regulated reverse mortgages carry a statutory guarantee that you cannot be left owing more than the net proceeds of sale, provided you meet your obligations under the contract.
Flexible drawdown
Must you take it all at once?
Funds can often be taken as a lump sum, a regular income stream, a line of credit, or a combination. Drawing progressively rather than up front limits how much interest compounds.
HOW IT WORKS
The mechanics, and the compounding
The single most important thing to understand is how the balance grows. With no repayments, interest capitalises, and the debt can grow substantially over a fifteen or twenty year period — reducing what remains for your estate.
- Maximum borrowing is tied to your age and the property's value, and rises as you get older
- Interest is added to the balance rather than repaid monthly
- You remain responsible for rates, insurance and maintaining the property
- The loan is repaid on sale, on a move to aged care, or from the estate
- Voluntary repayments are usually permitted and reduce the compounding effect
IS IT RIGHT FOR YOU
Thinking it through properly
This tends to suit you if
- You want to remain in your home — and other options would require moving.
- The need is specific — home modifications, medical costs, or a defined income gap.
- You can draw progressively — taking less, later, materially reduces total interest.
- Your family understands the plan — which prevents difficult surprises later.
Worth weighing up
- The balance compounds — and can grow substantially over a long period.
- It reduces your estate — there will be less to pass on, sometimes far less.
- It may affect pension entitlements — depending on how funds are used or held.
- Obligations continue — rates, insurance and upkeep remain your responsibility.
Because a reverse mortgage affects your estate and may affect Age Pension entitlements, independent legal and financial advice is strongly recommended, and family members are often best included in the conversation.
How working with us actually goes
Step 1
We start with a conversation, not an application
Step 2
We work out what you can borrow and what it costs
Step 3
We prepare the application and deal with the lender
Step 4
We stay across the loan long after settlement
COMMON QUESTIONS
Questions we get asked about this
Who can get a reverse mortgage?
They are designed for older borrowers, and lenders set a minimum age — commonly around sixty, though this varies between lenders and products.
How much you can borrow is tied to your age and the property's value, with the proportion increasing as you get older.
What is the no negative equity guarantee?
It is a statutory protection on regulated reverse mortgages that means you cannot be left owing more than the net proceeds from the sale of the property, provided you have met your obligations under the contract.
It protects you and your estate from the debt exceeding the home's value.
Will it affect my Age Pension?
It can. How the released funds are used or held may affect the assets and income tests applied by Services Australia.
This should be checked before you proceed, ideally with a financial adviser or through Services Australia's Financial Information Service.
What happens when I move into aged care?
The loan generally becomes repayable when you permanently leave the home, including a permanent move into residential aged care.
Terms vary between lenders, particularly where one member of a couple moves and the other remains, so it is worth confirming the specifics of any contract.
Are there alternatives worth considering first?
Often, yes. Downsizing, the federal Home Equity Access Scheme, assistance from family, or a conventional loan if income supports repayments are all worth weighing up.
A reverse mortgage is one option among several, and it should be chosen on the merits rather than by default.
RELATED
Where people usually go next
GET IN TOUCH
Want to talk it through, with family included?
Would rather talk it through?
(02) 9659 1694Important information
A reverse mortgage is a significant long-term decision that affects your estate and may affect government entitlements. We strongly recommend independent legal advice and advice from a licensed financial adviser before proceeding, and we encourage you to involve family members in the discussion.
The information on this page is general in nature. It has been prepared without taking your objectives, financial situation or needs into account, so it is not personal advice and you should consider whether it is appropriate for you before acting on it.
Any rates, figures or examples shown are indicative only. Lending is subject to approval, and lender eligibility criteria, terms, conditions, fees and charges apply. Talk to us about what your own circumstances allow.