Unlock Your Home Equity Without Selling
If you’re 60 or older and own your home, a reverse mortgage could help you access your home’s equity without having to sell or move. Whether you need extra cash for retirement, home renovations, or unexpected expenses, a reverse mortgage allows you to borrow against your home while still living in it.
Use our Reverse Mortgage Calculator to get an estimate of how much you could borrow based on your age, property value, and lender criteria. Get a clearer picture of your options in just a few clicks.
What Determines How Much You Can Borrow?
The amount you can borrow with a reverse mortgage depends on several factors. Lenders assess these carefully to ensure the loan remains sustainable for you and manageable for them.
Lenders consider several factors when determining how much you can borrow, including:
Your Home's Value
The more your home is worth, the greater the equity available for borrowing. However, lenders often apply a loan-to-value ratio (LVR), meaning you can only access a percentage of your property’s total value.
Your Age
The older you are, the more equity you can unlock. Lenders allow a higher percentage of your home’s value to be borrowed as you age, as the loan term is expected to be shorter.
Interest Rates
The interest on your loan compounds over time, meaning the amount you owe increases as the years go by. A lower interest rate preserves more of your equity, while higher rates can reduce how much remains for your estate.
Lender Policies & Loan Limits
Different lenders have varying rules on maximum borrowing amounts, eligible property types, and loan terms. Some may also have conditions regarding how the funds can be used.
The Pros & Cons of a Reverse Mortgage
A reverse mortgage can be a valuable financial tool, but it’s important to understand both the benefits and potential drawbacks before making a decision.
Why consider a reverse mortgage?
Stay in Your Home
Unlike selling your home or downsizing, a reverse mortgage allows you to access funds while continuing to live in your property for as long as you want.
Supplement Your Retirement Income
Whether it’s covering daily expenses, medical costs, or home improvements, a reverse mortgage provides financial flexibility without needing to sell assets or rely solely on superannuation.
Flexible Loan Options
Choose how you receive your funds: as a lump sum, ongoing monthly payments, or a line of credit to access when needed.
Things to keep in mind:
Interest Accumulates Over Time
Unlike traditional loans, where you make regular repayments, a reverse mortgage accrues interest that adds to the loan balance. This means the total amount owed grows over time, potentially reducing the inheritance left for your beneficiaries.
Limited Borrowing Capacity
Reverse mortgages don’t allow you to borrow the full value of your home. Most lenders cap borrowing at a certain percentage of the property’s value, and the percentage increases with age.
Property Changes Value Matter
If your home value decreases, it may impact how much equity remains in the future. On the other hand, an increase in property value could help offset the accruing interest.
Reverse Mortgage Calculator - FAQs
Will I still own my home?
Yes, you remain the legal owner of your home. The lender places a mortgage on the property, but you can stay in your home for as long as you wish, provided you meet the loan conditions. Yes! A reverse mortgage allows you to retain homeownership while borrowing against its value.
How much can I borrow?
The amount depends on factors like your age, home value, and lender policies. Generally, older borrowers can access a higher percentage of their home’s value. Our calculator gives you a reliable estimate based on these factors. It depends on your age, property value, and lender criteria. Our calculator gives you an estimate.
What happens if I move or pass away?
If you move into aged care or pass away, the loan must be repaid, usually from the proceeds of selling your home. Any remaining equity after repayment belongs to you or your beneficiaries. The loan is typically repaid from the sale of your home. Any remaining equity belongs to you or your estate.
Can I make voluntary repayments?
Yes! While regular repayments aren’t required, many lenders allow you to make voluntary payments to reduce interest accumulation and preserve more of your home equity. Yes, some lenders allow you to make partial payments to reduce interest buildup.
What's Next?
Understanding your reverse mortgage options is the first step. If you’re ready to explore your borrowing potential further, we’re here to help.
If you prefer to chat, you can write to us at [email protected] or call us on 08 6285 8120.
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