Australian homeowners aged 60+ can use a reverse mortgage to borrow money using their home as security. But when you sell the property the lender gets a portion of the sale.
These home loans offer low costs, coupled with a host of features, giving the best overall value.
7+
Great
These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.
5+
Standard
Usually the home loans would offer above average rates. They may still include some competitive features.
0+
Basic
Higher costs and/or fewer features.
How do reverse mortgages work?
Reverses mortgages are for Australian home owners aged 60 and over who need to access some of the money in their property without selling it (this money is called equity).
A reverse mortgage lender charges fees and interest on the money you borrow. But instead of making monthly repayments, you can pay the loan back later when you sell, move into a retirement home or die.
The amount of equity in your home you can borrow is limited and is determined by your age and the value of your property. Lenders won't let you borrow more than 50% of your property's value.
⚠️ Seek independent financial advice before applying for a reverse mortgage
Taking out a reverse mortgage can affect your ability to pay for future living expenses and reduces the value of your home. A reverse mortgage could also affect your eligibility for the Aged Pension.
Seek independent financial advice before applying for a reverse mortgage.
Reverse mortgages: Key facts and terms
What is equity?
Equity is the current value of your home, minus any debts. It's how much of the home you own, in a dollar value.
If your home is worth $700,000 and you have $100,000 left on your home loan you have $600,000 equity. If you've paid off your home loan your equity is $700,000.
A reverse mortgage lets you borrow money using the equity in your home.
How do I pay off a reverse mortgage?
You don't have to repay a reverse mortgage debt over time like a normal home loan.
You can pay it off when you sell your home, move into an aged care facility or die.
Some lenders may let you pay off part or all of the debt in instalments.
How can I access the money I borrow?
You can borrow the money in one go (lump sum), a regular monthly payment or a line of credit (an approved amount you can spend flexibly).
How much can you borrow on a reverse mortgage?
Most reverse mortgage lenders let you borrow between 15% and 45% of a property's value. The percentage also depends on your age. Here's an example.
Age of borrower
Percentage of property value available
60
15%
65
20%
70
25%
75
30%
80
35.5%
85+
45%
Reverse mortgage example
You're 65 years old and you have a home valued at $900,000. You own the home outright, so your equity is 100%, or $900,000.
Your lender will let you borrow up to 20% of your equity, which is $180,000.
You decide to borrow $60,000 with an interest rate of 9% and a $500 application fee. In 10 years you sell the property, which has risen in value 3% a year to be worth over $1,200,000.
After 10 years your $60,000 loan plus interest is now a debt of $148,307. After paying the debt your equity is 88% of the home's value, which is over $1 million.*
*This is a simple reverse mortgage calculation that assumes a fixed 9% interest rate and a 3% annual increase in your property's value. It does not take other factors into account and is purely an illustrative example.
Which banks offer reverse mortgages?
Several smaller banks and specialist retirement finance providers offer reverse mortgages in Australia today. The Big Four banks and their subsidiaries no longer offer reverse mortgages.
Australian lenders who offer reverse mortgages
Household Capital
Heartland
Seniors First
Gateway Bank
P&N Bank
G&C Mutual Bank
Please note that this list is not exhaustive.
Reverse mortgage calculator
Use our reverse mortgage calculator to estimate how much you can borrow and what it will cost you.
To use the calculator, enter the following details:
Your age. The older you are, the more equity you can borrow.
Your property's value. You can borrow a percentage of your property's value. You can estimate your home's current worth if you're not sure.
An estimate of your property's future value. The lender factors in the future growth of your property's value. You can choose high, medium or low. You can also insert your own figure. Lenders usually go with 3%.
The interest rate. Add the interest for the reverse mortgage product you are interested in.
Payment options. You can get paid in a lump sum or a regular monthly payment.
How to find the best reverse mortgage for you
Look for a lower interest rate. A lower rate means you pay less interest on the money you borrow.
Calculate the fees. Reverse mortgages often have high set-up fees.
Decide on your payment type. Find a reverse mortgage that offers the type of payment you need (lump sum, monthly payment or line of credit).
Customer service. Find a lender that offers good customer service and takes the time to explain everything to you clearly.
Are there any risks or downsides with a reverse mortgage?
Reverse mortgages aren't risky necessarily. But they have significant costs that borrowers need to be aware of.
High repayment costs. Reverse mortgages help you turn your non-liquid home equity into real cash. But they're expensive. In the example above, a $60,000 loan ends up costing the borrower more than double this, at $148,000.
You lose home equity. If you borrow a portion of your home's equity and plan to pay it back when you sell, you effectively lose a portion of your home's current (and future) value. It's something to be aware of.
Higher interest. Interest charges on reverse mortgages are higher than on home loans. As the interest compounds, the loan amount can increase rapidly.
Fees. Setup costs for a reverse mortgage may vary between lenders. Application fees range from $500 – $1,000.
Pension eligibility. A reverse mortgage may affect your ability to qualify for the pension. Contact the Department of Human Services to find out how it could impact your eligibility.
Break fees. If you fix the interest rate on your reverse mortgage, the charges to break the agreement can be costly.
Alternatives to a reverse mortgage
Sell your home
If you want to access the equity in your property, but don't want to take out a reverse mortgage, the primary alternative is to sell or downsize your home. However, this will incur other costs such as stamp duty, agent fees and conveyancing fees.
Home Equity Access Scheme
The Home Equity Access Scheme is a federal government scheme for older Australians. Similar to a reverse mortgage, the scheme allows eligible older Australians to get "a voluntary non-taxable loan" using a property as security.
The scheme offers a lower interest rate than reverse mortgages. To qualify you need to be of pension age, receiving an eligible pension, own a property and meet other criteria.
Home loan top-up
If you still have a home loan your lender might let you borrow a little more via a home loan top-up. This is just a way of extending your loan to borrow a little more. The interest rate will be lower than a reverse mortgage. But unlike a reverse mortgage you'll have to make regular repayments.
Line of credit
Another way to access equity in your home is via a line of credit loan secured by your property. You can get approved for a set amount and then you only pay interest on the money you spend.
Like a home loan top-up, you'll need to repay this loan over time, unlike a reverse mortgage.
Access your super
You can access your super from age 60. Depending on what you need to cover, and how much super you have, withdrawing a lump sum from your super could be an option. After age 60 withdrawals are tax-free too.
Frequently asked questions about reverse mortgages
Yes. Your name is still on the title and you retain ownership of your home.
Yes. It's completely up to you when you choose to sell your home or move into a care facility.
A reverse mortgage is a big financial decision and there's no right answer to this question. While it allows you to access the equity in your home, there are also some risks to taking out a reverse mortgage and it can impact the rest of your family if you're planning on leaving the property to children.
In September 2012 the government introduced a no negative equity protection for reverse mortgages. This means you can't end up owing the lender more than your house is worth.
You or your estate also won't be asked to cover any shortfall that may arise in the event that your home is sold for less than the amount owed on your reverse mortgage.
It is possible to choose a "protected equity option" with some lenders. This lets you preserve a predetermined amount of equity that can't be accessed for future use as an inheritance for your beneficiaries. For example, if you want to protect 20% of your equity for inheritance purposes, your lender will calculate the amount you can borrow to protect this amount.
For example, if your home is worth $500,000, 20% of this amount is $100,000. So the lender will calculate how much you can borrow based on only having $400,000 in equity available.
Sources
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To make sure you get accurate and helpful information, this guide has been edited by
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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University.
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I have a home loan of #105,000 and an equity access loan of $22,000 I am almost 80 years old and my home is worth $480,000 according to real estate agents. Can I get a reverse mortgage to pay out my loans and who is the best reverse mortgage lender?
Finder
AngusOctober 18, 2024Finder
Hi Ann, As you already have a mortgage and an equity access loan on your property, you might find it challenging to get a reverse mortgage, since there are already multiple debtors with an interest in your home’s value. If you did get one it would likely be for a lower amount. Given the complexity of your situation, it might be worth talking to a mortgage broker to see if you can consolidate your existing loans or otherwise access more funds. Good luck!
ReneeSeptember 25, 2024
When taking out a reverse mortgage are there penalties for paying the loan out early?
Finder
RebeccaSeptember 26, 2024Finder
Hi Renee,
This typically depends on the loan that you’re taking out. Some lenders will charge penalty fees, but others will not. As a general guide, variable rate reverse mortgages will be more likely to allow early repayment with no fees. Fixed rate loans tend to charge if you want to repay early and have limits on the amount of extra repayments you can make.
When you’re comparing, be sure to check the lenders fees and features where they will usually address early repayment fees.
Thanks,
Rebecca
DonMay 1, 2024
What is the best bank in NSW for reverse mortgage, including interest rate, application & valuation fees.
I am 79 and home is worth $800K.
Am looking for lump sum of $85K.
Finder
SarahSeptember 20, 2024Finder
Hi Don,
We’re a review and comparison site so we’re not able to provide personal customer service or financial advice. Your best bet is to contact a reverse mortgage provider directly and ask about your specific situation. You might also want to look into the Home Equity Access Scheme.
Hope this helps!
NeilAugust 8, 2019
The reverse mortgage calculator is quite useful. However, I want to make a repayment each month or fortnight. Is there an enhanced version of the calculator that provides for repayments of interest at least, maybe more?
Finder
JeniAugust 9, 2019Finder
Hi Neil,
Thank you for getting in touch with Finder.
We appreciate your feedback on this page. I have forwarded your feedback to the team who’s on it and they’d look into this. Please note that when it comes to repayment and calculation of interest varies per lender.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
johnNovember 13, 2017
I am 73 years old my wife is 55 we own our house can we reverse mortgage 100,000 our house value 1,000,000
Finder
JoanneNovember 13, 2017Finder
Hi John,
Thank you for visiting Finder.
For this particular concern, it would be best that you reach out mortgage broker that way you will get expert advice and get specialized answers to your questions.
Learn how to compare rates to find the best home loan and start saving money on your mortgage today.
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I have a home loan of #105,000 and an equity access loan of $22,000 I am almost 80 years old and my home is worth $480,000 according to real estate agents. Can I get a reverse mortgage to pay out my loans and who is the best reverse mortgage lender?
Hi Ann, As you already have a mortgage and an equity access loan on your property, you might find it challenging to get a reverse mortgage, since there are already multiple debtors with an interest in your home’s value. If you did get one it would likely be for a lower amount. Given the complexity of your situation, it might be worth talking to a mortgage broker to see if you can consolidate your existing loans or otherwise access more funds. Good luck!
When taking out a reverse mortgage are there penalties for paying the loan out early?
Hi Renee,
This typically depends on the loan that you’re taking out. Some lenders will charge penalty fees, but others will not. As a general guide, variable rate reverse mortgages will be more likely to allow early repayment with no fees. Fixed rate loans tend to charge if you want to repay early and have limits on the amount of extra repayments you can make.
When you’re comparing, be sure to check the lenders fees and features where they will usually address early repayment fees.
Thanks,
Rebecca
What is the best bank in NSW for reverse mortgage, including interest rate, application & valuation fees.
I am 79 and home is worth $800K.
Am looking for lump sum of $85K.
Hi Don,
We’re a review and comparison site so we’re not able to provide personal customer service or financial advice. Your best bet is to contact a reverse mortgage provider directly and ask about your specific situation. You might also want to look into the Home Equity Access Scheme.
Hope this helps!
The reverse mortgage calculator is quite useful. However, I want to make a repayment each month or fortnight. Is there an enhanced version of the calculator that provides for repayments of interest at least, maybe more?
Hi Neil,
Thank you for getting in touch with Finder.
We appreciate your feedback on this page. I have forwarded your feedback to the team who’s on it and they’d look into this. Please note that when it comes to repayment and calculation of interest varies per lender.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
I am 73 years old my wife is 55 we own our house can we reverse mortgage 100,000 our house value 1,000,000
Hi John,
Thank you for visiting Finder.
For this particular concern, it would be best that you reach out mortgage broker that way you will get expert advice and get specialized answers to your questions.
Cheers,
Joanne