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Updated October 2026 · General information for Australian homeowners, mainly aged 60+.

The name makes it sound like you're un-buying your house and getting paid for the privilege. Not quite, but it's closer than you'd think. A reverse mortgage lets older Australians tap into the equity in their home without selling it or making regular repayments. It can be useful, it can be costly, and it deserves a long, slow read before you sign. Let's take it slowly.

What a reverse mortgage is

According to ASIC's MoneySmart, a reverse mortgage lets you borrow money using the equity in your home as security. You keep living in your home and, generally, don't have to make repayments while you live there. Instead, interest is added to the loan (it "compounds"), so the debt grows over time. The loan is generally repaid when you sell the home, move into aged care long-term, or pass away, usually from the sale proceeds.

You can typically receive the money as a lump sum, regular payments, a line of credit, or a combination.

How much can you borrow?

MoneySmart notes the most you can borrow is likely around 15% to 25% of your home's value, depending on your age and the lender's policy. The older you are, the more you can usually borrow, because the loan is expected to run for a shorter time. Lenders generally require the borrower to be 60 or older.

The no negative equity guarantee

Since 18 September 2012, Australian reverse mortgages have been subject to a statutory "no negative equity guarantee". In plain English: you (or your estate) can't end up owing more than your home is worth, even if property values fall. That's an important protection, but it doesn't mean the loan is cheap or that your equity won't shrink.

The big risk: compounding interest

Interest on a reverse mortgage is added to the balance, and then you pay interest on the interest. ASIC requires lenders to give you a Reverse Mortgage Information Statement that includes a worked example. In a typical example, a $450,000 home with a $50,000 reverse mortgage can see the borrower's remaining equity fall from $400,000 to under $200,000 over a long period if the home's value doesn't rise, and be much higher if the home appreciates. The takeaway: the longer the loan runs and the higher the rate, the less equity is left for you or your family. Commercial reverse mortgage rates generally sit well above standard home loan rates.

Other things to know

The government alternative: Home Equity Access Scheme (HEAS)

The federal Home Equity Access Scheme (formerly the Pension Loans Scheme) is a voluntary, non-taxable loan from the Australian Government, administered by Services Australia and the Department of Veterans' Affairs. Key points:

Alternatives to consider

Checklist: before you take out a reverse mortgage

A gentle bit of humour

A reverse mortgage is like a very patient roommate: it doesn't ask for rent, but it keeps a tidy record, and eventually it presents the bill. Make sure you know the terms before you hand over the keys to the spare room.

Official links

Disclosure and Disclaimer

This article is general information only and is not financial, credit, legal, tax or investment advice. It does not consider your objectives, financial situation or needs. Reverse mortgages are complex and can significantly reduce the equity in your home. Interest rates, scheme rules and entitlements change often. Please do your own research and obtain independent advice from a licensed financial adviser, mortgage broker, accountant and solicitor before making any decision. To the maximum extent permitted by law, our business, its directors, employees and brokers accept no liability for any loss or damage arising from reliance on this article.

Disclaimer: The information in this article is general in nature and does not constitute personal financial or credit advice. Speak with Amber Finance so we can look at your own situation in detail.