February 6, 2026
Thinking about a Reverse Mortgage? What you should know
Your home is likely your most valuable asset. But as many Australian homeowners enter retirement, they face a common problem: they’re rich in property, but poor in day-to-day cash. The money you need to live comfortably, manage unexpected bills, or simply enjoy retirement is locked away in your home’s value. A
reverse mortgage can help with this. It’s a loan designed for seniors who want to access their home’s equity without selling. Unlike a standard loan, there are no regular repayments required. In this article, we will explain how a reverse mortgage works in Australia, so you can decide if it’s the right choice for you.
What is a Reverse Mortgage?
A reverse mortgage is a
loan secured against the equity in your home. Unlike a regular mortgage where you make repayments to the lender, a reverse mortgage is paid off when you sell the property or pass away. Over time, the interest and loan amount accumulate and are paid from the proceeds of your home’s sale.
Who is it for?
Reverse mortgages are for older Australians who own their homes or have a small mortgage remaining. It’s a way to get cash from your home’s value without the hassle of selling or moving. It’s often used by those who need extra money to support retirement, fund home renovations, cover healthcare costs, or help family members.
How Reverse Mortgages work in Australia
A reverse mortgage allows you to take a loan as a lump sum, an income stream or a line of credit without making repayments while you continue to live in the home. Interest continues to accrue, just like a regular loan, but unlike a standard mortgage, a reverse mortgage (including interest and fees) is usually repaid in full when your home is sold, you pass away or, most commonly, when you move into aged care.
Eligibility
To qualify for a reverse mortgage in Australia, you must be at least 60 years old. The amount you can borrow depends on your age and the value of your home. Generally, the older you are, the more you can borrow. Lenders will also consider the location and condition of your property.
How you receive the funds
You can receive the money in a few ways:
- Lump sum: You get the entire loan amount at once. This is often used for big purchases or paying off existing debts.
- Regular payments: You get smaller, regular amounts paid into your bank account, similar to an income stream.
- Line of credit: You can draw money as you need it, up to an agreed limit giving you flexibility in how you use the money.
How interest is calculated
Interest on a reverse mortgage is compounded, meaning it accrues not only on the loan amount but also on the accumulated interest. Over time, this can cause the total amount owed to grow significantly. That’s why it’s important to understand how a reverse mortgage can impact your home equity.
Key Benefits
- Stay in your home: You can continue living in your home while accessing it’s equity.
- No repayments: You don’t have to worry about making regular mortgage payments.
- Flexible funds: You can use the money for anything you need, whether it’s for travel, medical expenses, or just day-to-day living.
- Negative equity protection: Your loan will never exceed the value of your property.
FAQs
Q: How much can I borrow?
A: The amount depends on your age and the value of your property. Generally, lenders will lend you 15-20% of your home’s value at age 60, with the percentage increasing with age.
Q: Will it affect my pension?
A: It’s important to get financial advice on this. The loan itself isn’t counted as income, but how you use the money can affect your pension payments.
Q: What if I outlive the loan?
A: You can’t. The loan is only repaid when you move out. Both the interest and loan amount are paid from the sale of the property. The lender can’t force you to sell your home.
Use our Reverse Mortgage Calculator
To help you understand how a reverse mortgage could affect your finances, use our custom calculator below or use
this tool. Simply enter your details to see how the loan and interest could impact your home equity over time.
A reverse mortgage can be a powerful financial tool, allowing you to access your home’s equity without selling or making regular repayments. However, it’s important to understand the trade-offs, especially how interest accumulates over time and may affect what you leave for your family.
Because this is a significant decision with long-term consequences, it’s essential to get professional advice. We strongly recommend consulting both a financial advisor and a legal expert to ensure any financial decision you make aligns with your personal goals and best interests.
Take the first step toward a financially secure retirement.
Contact Kian Mortgage Solutions today to discuss your options or
call us on 1300 00 KIAN.
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