What is a Reverse Mortgage? What is a a Reverse Mortgage? Reverse Mortgage are loans for pensioners and retirees that are designed specifically for older borrowers who are typically ‘asset rich’ but ‘cash poor’. Known variously as ‘senior’s loans’, ‘reverse home loans’, and ‘senior’s finance’, Reverse Mortgages are the most popular form of home equity release in Australia. Reverse Mortgages allow people from the age of 60 to convert the equity in their property into cash for any worthwhile purpose. No income is required to qualify. Although interest is charged like any loan, the borrower is not required to make repayments (although they can usually make voluntary payments if they wish). Get the FREE Guide! for even more information on Reverse Mortgages.

How do Reverse Mortgages work? As with normal home loans, a Reverse Mortgage is secured by first registered mortgage over the borrower’s house. The amount of equity that can be released is determined by age and the value of the security property (although lenders have different policies on how much they will lend). Crucially however, the borrower retains full ownership and is able to stay in their home as long as they want. The interest is ‘capitalised’ -charged back to the loan account – and will compound over time ie; the balance of the loan will increase unless voluntary payments are made. The debt, including all interest and fees owed, is repaid to the lender when: The borrower sells the property of their own accord, OR

The borrower moves into aged care (not required with some lenders), OR

The last surviving borrower dies