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Get practical Australian guides on reverse mortgages, home equity release, aged care funding and retirement income strategies.
Reverse Mortgages in Australia 2025: What You Need to Know
A reverse mortgage allows Australian homeowners aged 60 and over to borrow against their home's equity without making regular repayments. Instead, interest compounds and the loan is repaid when the home is sold — typically when the borrower moves into aged care or passes away. It can provide a valuable source of retirement income, but the compounding interest means debt grows significantly over time.
How Much Can You Borrow?
Australian lenders typically allow borrowing of approximately 15–45% of your home's value, depending on age. The percentage increases with age because the loan term is shorter. As a general guide:
| Age | Typical Maximum LVR | Example ($800K home) |
|---|---|---|
| 60 | 15–20% | $120,000–$160,000 |
| 65 | 20–25% | $160,000–$200,000 |
| 70 | 25–30% | $200,000–$240,000 |
| 75 | 30–37% | $240,000–$296,000 |
| 80+ | 35–45% | $280,000–$360,000 |
No Negative Equity Guarantee
All reverse mortgages taken out since 18 September 2012 include a statutory no negative equity guarantee under the National Consumer Credit Protection Act. This means you can never owe more than the value of your home — even if compounding interest causes the debt to exceed the property value. If your home sells for less than the loan balance, the lender must accept that as full settlement.
⚠️ ASIC Warning: A reverse mortgage significantly reduces the equity in your home over time. The interest compounds — meaning you pay interest on interest. At 8.5% p.a., a $200,000 loan doubles in approximately 8.5 years even without any additional withdrawals. Seek independent financial and legal advice before signing any reverse mortgage contract. Contact ASIC's MoneySmart at moneysmart.gov.au or call 1300 300 630.
This calculator provides general estimates only. Actual loan amounts depend on lender assessment, property valuation and individual circumstances. Not financial advice. Seek independent advice before proceeding with a reverse mortgage.