Reverse Mortgages

A reverse mortgage allows someone aged 60 or over to borrow money against the value of yourhome. It will only needs to be repaid when you sell the house, permanently move out (such as to go into long-term aged care) or die.

They work in the opposite way to a home loan. Instead of the loan sum diminishing because of your repayments, interest is applied to your loan so the debt increases. You're not required to make any repayments but the impact of fees and interest means the debt grows over time.

Joint owners
If you live with a partner or spouse and you're joint owners of the house, the reverse mortgage would be in both names so your home is protected as long as one of you lives there. If only one of you owns the house,  the loan will only be in one name so it would have to be repaid when the partner who owns the house dies or moves into residential aged care.

Disadvantages
The main disadvantages of reverse mortgages are they can limit your options in the future:

• You may not have enough money left to fund moving into a retirement village
• The value of your estate may be much less than anticipated because the debt increases over time
• If you take the loan as a lump sum it may have an impact on your eligibility for Centrelink payments.