A reverse mortgage is where you borrow money against the equity you hold in your home, with your home acting as security for the loan.

You retain ownership of your home, and you don’t necessarily have to make any repayments while you remain living in your home.

Like any other loan, interest is payable – and you must repay the loan in full when you sell your home, or die, ore enter into aged care.

Not everyone is eligible to qualify for a reverse mortgage, and it’s important to be aware of the risks that can be involved: risks such as the interest rate being higher than a standard home loan, or the fact that the interest compounds over time – making the debt larger.

And if you are the sole owner of your property and you die or enter aged care, anyone who lives with you may no longer be able to live in the home as the loan will need to be repaid in full.

Having a reverse mortgage can also affect your eligibility for a pension. Furthermore, if for instance you have established a fixed rate reverse mortgage and you want to break your agreement, harsh penalties can apply.

Having said all this, when used responsibly, a reverse mortgage can reduce financial stress. Just be sure to get expert advice before committing to one, so you understand the full implications of the reverse mortgage on the equity in your home and the impact of movements in interest rates and house prices.

Talk to an Ink Wealth Advisor who can provide you with further information. And if you decide if a reverse mortgage is right for you, we can also assist you in making an application.