Reverse mortgages are quite controversial, as they are pitched at borrowers who are approaching retirement or who are already retired.

Retirees with high asset-based wealth but little cash can convert the value of their home into ready cash, to fund their retirement lifestyle.

Reverse Mortgages c an be paid as a lump sum, a regular stream of income, a line of credit or a combination of all these strategies.

Interest is charged like any other loan, however you don’t have to make repayments whilst you are living in your home and the interest compounds over time and is added to your loan balance.

A valuation is conducted on your property to determine its’ worth and the amount you can borrow is based on this and the age of the youngest borrower.

You remain the owner of your property and can stay in it for as long as you want.

The loan must be repaid in full, including interest and fees, when you sell your home, upon your death or if you move into aged care.

Generally, Reverse Mortgages are only available to home owners above 60 years of age and the seniors need to own their property.

Interest rates are usually 1-2% higher than a standard mortgage as no regular repayments are required.

Current interest rates are between 7% and 8.5% and there may be impacts on a homeowner’s pension eligibility.

Statutory negative equity protection was introduced in 2012 to ensure that property owners cannot end up owing more than the market value of their property and their estate does not inherit a debt when they die.

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