Keep Your Home and Your Peace of Mind

A reverse mortgage is a special home loan for seniors that lets older Australian homeowners unlock some of their home’s equity without having to sell or move out. It’s called “reverse” because, instead of you making mortgage payments to the bank, the bank can provide you with funds (either as a lump sum or in regular installments), and you don’t need to make any monthly repayments. Interest accrues over time, causing the loan balance to grow, but you remain the legal owner of your home and can stay in it as long as you wish. In Australia, the loan is generally repaid only when you choose to move out of your home (for example, into aged care) or upon your passing.

Yes. Reverse mortgages in Australia are regulated by consumer credit protection laws. By law and provided you meet your obligations under the loan, all reverse mortgage lenders must provide a lifetime occupancy guarantee, meaning you have the right to live in your home for as long as you choose. The law also mandates a no negative equity guarantee, which means you will never owe more than the market value of your home (subject to some conditions).

The law also requires that mandatory disclosures are made to you during the loan application process. These disclosures are designed to ensure that you fully understand the consequences of taking out a reverse mortgage and that your personal financial needs are considered.

The amount of equity you can release with a reverse mortgage depends on your age and the property’s value. For a loan with Kindred, you need to be at least 60 years old to qualify, and at that age, you can borrow up to 20% of your home’s value. The percentage you can borrow grows as you get older, adding 1% per year of age above 60. For example, at age 70, you could borrow up to 30% of your home value. Kindred has a maximum loan-to-home-value rate of 50% which applies to borrowers who are 90 years of age or older.

You will be charged interest on the loan amount you borrow. Reverse mortgage interest rates in Australia are generally higher than standard home loan rates, reflecting the fact that you are not obligated to make any regular repayments under a reverse mortgage loan. Fees and interest are added to the loan balance as you go, and the interest compounds. This means the loan will grow over time, so you should ensure you’re comfortable with how the balance could increase over the longer term.

There may also be some fees to consider – typically these can include (but are not limited to) an application or setup fee, sometimes a property valuation fee and/or a small ongoing account management fee or settlement fees. Reverse mortgage lenders are required to clearly explain to you all fees and costs associated with the reverse mortgage up front, ensuring that there are no surprises. Also remember, because you don’t have to make monthly repayments on a reverse mortgage, the interest charges are added to the loan balance over time (compound interest).

A reverse mortgage will reduce the amount of equity left in your home that you can leave to your children or other beneficiaries or use for other purposes for your estate. You remain the owner of your home, so when you eventually move out permanently, your house is usually sold, and the loan is paid off from the sale proceeds. Any money left after repaying the reverse mortgage goes to your estate (to your family or other beneficiaries). Australian law protects your family with the no negative equity guarantee, ensuring that the loan balance can never be higher than the home is worth. It’s a good idea to discuss this plan with your family so everyone understands what to expect.

Yes, absolutely – you can use the funds from a reverse mortgage for almost any purpose that makes your retirement easier or more enjoyable. Many senior Australians use their reverse mortgage to cover daily living expenses and bills, pay for home repairs or renovations, or handle medical and aged care costs. Some even use it to help their family – for example, by providing financial support to children or grandchildren for big life expenses. Simply put, it’s your home equity converted into cash that you’re free to use in the ways that benefit you most, whether that’s reducing financial stress, improving your comfort and lifestyle, or lending a hand to loved ones.