Reverse Mortgage Pros and Cons: What Retirees Should Know

A reverse mortgage lets homeowners aged 60+ borrow against their home without regular repayments. See how the debt grows in the reverse mortgage calculator.

Pros

• Stay in your home and access cash for living costs, renovations or care.
• No repayments while you live there.
• Negative equity protection – you can’t owe more than the home is worth.

Cons

• Interest compounds: $100,000 at 9% grows to about $245,000 in 10 years.
• Rates are higher than standard home loans.
• Less inheritance for your family.
• It can affect Age Pension eligibility if funds are held as assets.

How much can you borrow?

A rough rule: 15–20% of the home’s value at 60, plus about 1% for each year older.

Alternatives to consider

• The government Home Equity Access Scheme (usually cheaper).
• Downsizing and using the downsizer super contribution.
• Renting out a room.

Always get independent financial and legal advice, and involve your family in the decision.