Reverse Mortgage

For a copy of our reverse mortgage information statement, please click here.

Reverse mortgages are a way a retiree can augment their pension or retirement income, by allowing them to access the equity in their home. The loan to value ratios (LVR) on these loans are predominantly low , with 25% of the property value normally allowed to be used as an equity release. The good thing about reverse mortgages is that they are borrowings and not income, so if you draw out small amounts regularly, like a wage, they should not impact on government entitlements such as the age pension. This should be discussed with Centrelink prior to making any decisions.

In Australia there is a peak body that assists with regulation of reverse mortgages called Sequal. We recommend only looking at products that are from Sequal members or are Sequal approved. All of Sequal’s approved products are what is known as Limited Recourse. What this means is that, regardless of the amount of money that is released or the amount of time it is released for, you will not owe more than the value of your home, nor will you have to move out of that home should your loan exceed its limit.

There is no means testing nor income requirements for reverse mortgages, as there is no need to repay or make repayments, though you are able to repay the loan should you choose to. Though much consideration will need to be given to the amount of years you will want to be able to access income from your home, how much you will need and the projected value of your home over that period of time. This decision should be made in consultation with family and financial advisers.

Loans My Way are Sequal accredited and happy to provide any further information. Entering into a reverse mortgage is a big decision to make and should be done so only after careful evaluation and consideration.