Pros and cons of reverse mortgages

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Reverse mortgages allow you to use the equity in your home as security to borrow money. The following are pros and cons of acquiring a reverse mortgage. 


  • You will be the owner of your home and can continue to live in it
  • Some of the money you gain from it could be used to supplement retirement (especially relevant if your super isn’t covering all expenses 
  • You could use the lump sum payment for renovations if your home is in a bad condition
  • You could put the money aside for emergencies that can arise 
  • You won’t feel stressed about your living situation


  • Over time, your debt will grow while your equity decreases
  • Interest and fees will accumulate and contribute significantly to your loan balance
  • The interest rate that is charged on a reverse mortgage will be higher than on a standard home loan
  • Reverse mortgages could impact whether you receive Age Pension
  • Reverse mortgages could inhibit your ability to afford aged care
  • If you are the sole owner of your home, then if you move or pass away, the person staying with you may not be able to stay
  • If you plan to invest the money from your reverse mortgage, then your home is at risk (not just the portion being invested) 

Planning for unforeseeable circumstances is especially important during retirement. Therefore before you choose to opt for a reverse mortgage, make sure you consider your options. 


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