The Property Finance Broker

A Quiet Corner of the Market That’s Worth Understanding

Of all the loan products I get asked about, reverse mortgages probably attract the most assumptions — and the most outdated ones. People either dismiss them outright as something that “rips off pensioners”, or they treat them as a magic fix for funding retirement without really thinking through the trade-offs.

The reality, like most things in finance, sits somewhere in the middle. Reverse mortgages aren’t right for everyone. But for the right person at the right stage of life, they can solve a problem that very little else can.

Here’s a plain-English look at how they actually work today, who they suit, the things to be careful about, and how to think about the decision properly.

What Is a Reverse Mortgage?

A reverse mortgage is a loan secured against your home that lets you access some of your equity without selling the property and without needing to make regular repayments. The interest is added (capitalised) onto the loan balance over time, and the loan is repaid in full when you sell the property, move permanently into aged care, or pass away.

In short: you keep living in the home, the loan grows quietly in the background, and it gets settled from the sale proceeds later on.

In Australia, reverse mortgages are tightly regulated under the National Consumer Credit Protection Act, and since 2012 every reverse mortgage comes with statutory Negative Equity Protection — meaning you (or your estate) can never owe more than the home is worth when it’s sold. That’s a really important safety net, and it didn’t always exist. The reverse-mortgage market of 2026 is very different to the one some people remember from twenty years ago, and the consumer protections in place now are a significant part of why.

Who’s Eligible?

In broad strokes:

• Most commercial providers require borrowers to be at least 60 years old. Some start at 55.
• The amount you can borrow is tied to your age. A common rule of thumb is around 15–20% of the property’s value at age 60, increasing by roughly 1% per year of age. At 70 you might access 25–30%; at 80, closer to 35–40%.
• Your home is the security, and you retain full ownership.
• You need to live in the property as your principal place of residence.

Example: A 70-year-old with a debt-free home valued at $1.2m might access somewhere around $300,000–$360,000 via a reverse mortgage, depending on the lender. They wouldn’t need to make a single repayment, but interest would compound on the balance until the home is eventually sold.

The actual amount and structure varies between providers, and so do the rates. This is one of those products where shopping the market really matters, because the spread between the best and the worst offer can be material over the life of the loan.

When Does a Reverse Mortgage Make Sense?

Here’s a checklist of situations where it can genuinely be the right tool:

• You’re asset-rich and cash-poor. Plenty of equity in the home, but income isn’t covering the lifestyle you want.
• You want to age in place. Selling and downsizing isn’t appealing, or the downsize maths doesn’t actually save you much once stamp duty and moving costs are factored in.
• You need a Refundable Accommodation Deposit (RAD) for aged care for a partner, and would prefer not to sell the family home to fund it.
• You want to fund home modifications so you can stay in your home longer (ramps, bathroom renovations, stair lifts, and so on).
• You have a mortgage you can’t comfortably service into retirement and want to take the repayment pressure off.
• You want to help adult children with a deposit while you’re still here to see them use it.

The Things to Be Careful About

These are real, and they’re the reason I’d never recommend a reverse mortgage as a quick decision.

• Compounding interest. No repayments sounds great until you see the projection. At commercial rates of 8–10%, the balance can roughly double in 7–9 years. The longer the loan runs, the more of your equity it eats.
• Inheritance impact. Whatever is left for the estate gets smaller. That’s not a deal-breaker — it’s your equity to use — but families need to be part of the conversation.
• Pension and aged care implications. Drawing down equity can affect your Age Pension entitlement and, later on, your aged care fee calculations. Centrelink advice is non-negotiable.
• Family dynamics. Open conversations early, with the people who’ll be impacted, save a lot of pain later on.
• Alignment with your will. This is the one most people don’t think about. If your will leaves the family home to a specific beneficiary, a reverse mortgage changes what that gift looks like at settlement. It’s worth having your solicitor look at this before signing anything.
• Independent legal advice is mandatory. It’s not optional, and it’s not a tick-the-box step. Use it properly.

How I Approach These Conversations

I’m happy to give advice on the reverse mortgage product itself — how the structures compare, what the projections look like, what you can and can’t do with the proceeds, and which provider is likely to suit your goals.

What I always recommend alongside it is independent advice from the people who know the rest of your picture:

• Your accountant, to look at the tax and Centrelink interactions, and how it fits with the rest of your retirement strategy.
• Your solicitor, particularly to make sure the loan aligns with your will and any estate planning you’ve put in place.

That’s not me passing the buck — it’s how a reverse mortgage decision actually gets made well. The product piece is mine to advise on; the broader life and estate piece sits with people who know that side of your world. Used together, you get a decision that holds up over time.

A Quick Note on Where the Market Is in 2026

There are fewer reverse mortgage providers in the Australian market today than there were a decade ago, but the ones still active are better regulated and more transparent. Commercial rates are higher than people typically expect — usually 8–10% — which is why the Home Equity Access Scheme deserves a serious look before going commercial. It’s also why getting the right product from the right provider matters: the difference between a well-priced reverse mortgage and a poorly-priced one, compounded over ten or fifteen years, is significant.

Questions Worth Asking Before You Sign

If you’re considering a reverse mortgage, these are the questions I’d want answered first:

• What does the projected loan balance look like in 5, 10 and 15 years at the current rate?
• What does it look like if rates rise another 1–2%?
• Have I compared the Home Equity Access Scheme as an alternative?
• Have I spoken to my accountant about Centrelink and tax impacts?
• Have I spoken to my solicitor about how this interacts with my will?
• Are the people who’ll be affected by my estate aware of this decision?
• Am I confident this is the right product for the problem I’m trying to solve — or is there a simpler option (downsizing, restructuring an existing mortgage) I haven’t fully explored?

If any of those answers aren’t a clear yes, it’s not the right time to sign.

The Bottom Line

Reverse mortgages aren’t a product to fear, and they’re not a product to rush into. They’re a specific tool for a specific stage of life. When they fit, they fit really well. When they don’t, there are usually better paths — downsizing, the Home Equity Access Scheme, or restructuring existing debt before retirement.

The most important thing is doing the maths properly, modelling the long-term impact, having the family conversation, and making sure the product sits cleanly alongside your accountant’s and your solicitor’s view of your situation. Anyone offering you a reverse mortgage without all of those is doing it wrong.

If retirement income, aged care funding, or staying in the family home is something you or a parent is working through, let’s start with a quiet chat. I’ll talk you through the product, the alternatives, and the questions to take to your accountant and solicitor. No hard sell, no pressure — just an honest look at the options.