A reverse mortgage allows eligible homeowners to borrow money using the equity in their home as security, while continuing to live in the property. Unlike a traditional home loan, you generally don’t make regular principal and interest repayments. Instead, interest is added to the loan balance, and the loan is generally repaid when you sell your home, permanently move out, or in accordance with the terms of the loan and your estate.

Reverse mortgages are generally designed for older homeowners who have equity in their home and want to access some of that equity without selling or downsizing. It could be worth considering if you want additional retirement income, funds for a significant expense, money for home improvements, help for family, or simply greater financial flexibility.

But there’s no simple checklist that makes someone “right” for a reverse mortgage. We will need to understand your individual circumstances and what you’re hoping to achieve before suggesting whether it could be appropriate for you.

That depends on a number of things, including your age, the value and type of your property, any existing mortgage and the lender’s criteria. Generally, the amount you can borrow relative to your home’s value increases as you get older, but every lender and situation is different.

This depends on the lender.

Many reverse mortgage products are designed for people aged 60 and over, although some lenders may have different minimum ages. The amount you can borrow is also generally influenced by the age of the youngest borrower.

The important point: being over 60 doesn't automatically mean you'll qualify.

Generally, you don’t make regular principal and interest repayments in the same way you would with a traditional home loan. Instead, interest is generally added to the loan balance. That doesn’t mean you’re borrowing money for free. It means the amount you owe can increase over time, which is something we’ll look at carefully together.

This is one of the things you should understand before making a decision. Because the interest is generally added to the loan balance, interest can compound over time. The longer the loan remains outstanding, the more the balance may grow.

Exactly how much you could owe will depend on things such as how much you borrow, the interest rate, fees, whether you access more money later and how long you have the loan.

Rather than just looking at what you can borrow today, We help you look at different scenarios over time so you can see what that could mean for the equity in your home. Lenders and brokers must provide reverse mortgage equity projections as part of the process.

Yes. A reverse mortgage doesn’t mean you’re selling your home. You remain the owner, while the lender has a mortgage over the property as security for the loan. You can continue to live in your home, subject to the terms and conditions of the loan.

This is an important one to think about, particularly as you’re making a long-term retirement decision. If you permanently move out of your home, including into residential aged care, the reverse mortgage will generally become repayable in accordance with the loan terms.

Reverse mortgages taken out from 18 September 2012 have negative equity protection. This means you generally can’t end up owing the lender more than the value of your home when the loan is settled, subject to the relevant rules and loan terms.

It’s still important to understand that negative equity protection doesn’t mean the loan has no impact. The amount of equity you have available in the future, including what may eventually be left for your estate, can still be significantly reduced. That’s why looking at the longer-term projections is important.

The loan doesn’t simply disappear. Generally, the outstanding amount is repaid from your estate. This may involve selling the property and using the proceeds to repay the loan, with any remaining equity passing to your beneficiaries. If your family wants to keep the property, they may need to arrange another way to repay the outstanding loan.