Reverse mortgages: how they work in Australia
A reverse mortgage lets a homeowner aged 55 or over borrow against the home with no repayments while they live there: the interest is added to the balance and compounds, and the loan is repaid when the home is sold, the borrower moves into aged care or dies. You can typically borrow 15% to 20% of the home's value at 60, plus about 1% for each year over 60, at commercial rates of 7.85% to 9.05% as at June 2026, against 3.95% on the government's Home Equity Access Scheme. It suits homeowners who want to stay put without other savings to draw on, and every reverse mortgage written since September 2012 carries a no negative equity guarantee, so you can never owe more than the home is worth.
- No repayments while you live in the home; interest compounds onto the balance; repayable on sale, aged care or death (Heartland, Unity Bank, Moneysmart)
- How much: 15 to 20% of value at 60, plus about 1% a year after (Moneysmart); Unity Bank publishes bands from the lower of $200,000 or 15% at 60 to 64, up to $400,000 or 40% at 80 and over
- Cost: commercial rates of 7.85% to 9.05% as at June 2026 (National Seniors); the government’s Home Equity Access Scheme charges 3.95% compounding fortnightly
- No negative equity guarantee on every loan from 18 September 2012: you can never owe more than the home is worth (Moneysmart, Westpac)
- The majors do not offer them; Westpac says so on its own page. Heartland (55+), Household Capital (60+), P&N (65+, capped at $300,000) and Unity Bank do
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are calculated on a secured loan of $150,000 over 25 years for home loans, a loan of $30,000 over 5 years for car and personal loans, and $50,000 over 5 years for equipment finance, unless the lender states another basis.
What is a reverse mortgage?
Westpac's definition, on a page where it also says it does not offer one: a reverse mortgage allows you to borrow money using your home equity as security, with the funds taken as a regular income stream, a line of credit, a lump sum or a combination; you stay in your home and make no repayments while you live there; the interest compounds; and once the property is sold, the balance is repaid in full including interest and fees. Heartland adds the three triggers for repayment: selling the home, moving into aged care, or passing away. It is the only way to borrow against a home with no income to service repayments, which is why it exists and why it is expensive.
How much can you borrow?
Moneysmart's guide: at 60 the most you can borrow is likely to be 15% to 20% of the home's value, add about 1% for each year over 60, so about 20% to 25% at 65, and the minimum is typically about $10,000. Westpac publishes the same 15% to 20% at 60 and that the proportion rises each year. Unity Bank publishes its actual bands, assessed on the age of the youngest borrower.
| Age of youngest borrower | Unity Bank Retirees Access Home Loan maximum | Moneysmart general guide |
|---|---|---|
| 55 to 59 | Not offered (Heartland lends from 55) | Below the 60 guide; lender specific |
| 60 to 64 | Lower of $200,000 or 15% of value | 15% to 20% at 60 |
| 65 to 69 | Lower of $250,000 or 20% of value | About 20% to 25% |
| 70 to 74 | Lower of $300,000 or 25% of value | About 25% to 30% |
| 75 to 79 | Lower of $350,000 or 35% of value | About 30% to 35% |
| 80 and over | Lower of $400,000 or 40% of value | About 35% to 40% |
P&N Bank publishes a cap of $300,000 subject to age. Heartland publishes an estimate tool based on age, property value and location rather than a table. The reverse mortgage calculator applies the Moneysmart guide to your age and shows what the balance does over time.
What does it cost? Moneysmart's example, and the government alternative
Moneysmart's published example: a borrower aged for a 25% limit takes $125,000 from a $500,000 home for renovations, allows $1,000 for set-up fees, and uses the calculator's default rate of 7%. In 15 years, with the property rising 3% a year to $779,984, they owe the lender $358,967 and own 54% of their home. National Seniors publishes that commercial rates were 7.85% to 9.05% as at 11 June 2026, with one product advertised at 9.25%, so today's balances compound faster than that example. At 8.45%, the midpoint of that range, the same $125,000 is about $442,000 after 15 years; at the Home Equity Access Scheme's 3.95%, about $226,000.
| $125,000 drawn at age 70, home worth $500,000 | Balance after 15 years | Home value at 3% growth | Equity left |
|---|---|---|---|
| Home Equity Access Scheme, 3.95% compounding fortnightly | About $226,000 | About $780,000 | About 71% |
| Moneysmart example, 7% plus $1,000 fees | $358,967 (published) | $779,984 (published) | 54% (published) |
| Commercial rate at 8.45%, no fees | About $442,000 | About $780,000 | About 43% |
The government scheme is run by Services Australia for people of Age Pension age or older, pensioners and self-funded retirees alike. Its page publishes a voluntary non-taxable loan secured on Australian real estate, paid as a fortnightly amount or as a lump sum advance, at 3.95% a year compounding fortnightly on the balance, with a negative equity guarantee. National Seniors' advice is blunt: for seniors who want to preserve as much home value as possible, the difference between 3.95% and nearly 9% matters. Its limit is the structure: it is built to top up income fortnightly, and the lump sum advances are capped, so a large one-off need still points to a commercial product.
What do the lenders publish?
Checked against each lender's published page on 20 September 2026; "Not published" means the page does not state it. Rates and policies change without notice, so confirm before relying on them.
| Lender | Minimum age | Borrowing limit as published | Rate and fees as published | Other published terms |
|---|---|---|---|---|
| Home Equity Access Scheme (Services Australia) | Age Pension age | Payment amounts set by the scheme; fortnightly amount or lump sum advance | 3.95% p.a. compounding fortnightly | Voluntary, non-taxable; pensioners and non-pensioners; negative equity guarantee; repay or stop payments any time |
| Heartland Bank | 55 | Estimate tool by age, property value and location | Set-up fees come out of the amount borrowed; rates on its page | No required repayments; lump sum, regular advance (monthly, quarterly or annually) or cash reserve; repayable on sale, aged care or death; over 27,500 customers |
| Household Capital | Over 60 | Not published on the home page | Not published on the home page | Retain 100% ownership; guaranteed lifetime occupancy; can refinance an existing home loan into it |
| P&N Bank | Over 65 | Capped at $300,000, subject to age | No ongoing monthly or annual fees; revaluation fee if the bank revalues | Negative equity protection; repayable on sale, aged care or death |
| Unity Bank Retirees Access Home Loan | 60 | Age bands from the lower of $200,000 or 15% (60 to 64) to $400,000 or 40% (80 and over), on the youngest borrower | Variable rate | No term; payable from the estate on passing, vacating or sale |
| Westpac, NAB, CommBank, ANZ | Not offered. Westpac publishes on its own reverse mortgage page that it does not offer one; the other majors no longer write them | |||
The protections
Three that Moneysmart publishes. The no negative equity guarantee: every reverse mortgage taken out from 18 September 2012 means you cannot end up owing more than the home is worth; check the contract on anything older. Equity protection: you may be able to quarantine a portion of the home's value from the loan, for example to fund aged care. Voluntary repayments: you can usually repay early if circumstances change. Add the statutory requirement for lenders to provide projections, and Moneysmart's advice to get independent legal and financial advice and to talk to family, since the loan affects what the home leaves behind.
The alternatives
The Home Equity Access Scheme for anyone of pension age who needs income rather than a lump sum. Downsizing, which releases equity outright and, for over-55s, allows a downsizer super contribution of up to $300,000 each; the downsizing guide covers the loan and the contribution. A standard loan on retirement income, if the income exists; the pensioner home loan guide covers what lenders accept. Home reversion, where you sell a share of the home now; Moneysmart describes it as not a loan, with fees deducted from equity over time, and it is a smaller market. Family, whether a loan or a shared purchase, documented. Some licensed brokers arrange reverse mortgages and will price them against these; get matched with one who works this kind of lending and they contact you.
Later-life borrowing guides
The alternatives and the calculators.
Reverse mortgage FAQs
What is the biggest problem with a reverse mortgage?
Is a reverse mortgage a good idea in Australia?
How much can a 70 year old borrow on a reverse mortgage?
What is the 95% rule on a reverse mortgage?
Which banks offer reverse mortgages in Australia?
How does the Home Equity Access Scheme compare?
What happens when I move into aged care or die?
Does a reverse mortgage affect the Age Pension?
Access equity without selling, with the costs in view
Tell us your age, your home's value and what the money is for, and we refer you to a licensed broker partner whose practice includes reverse mortgages, who prices them against the government scheme and downsizing before anything is signed. Free for borrowers, no obligation.