Reverse mortgage calculator - understand your reverse mortgage loan

What is a reverse mortgage? 

Many people are unsure about what a reverse mortgage loan is.
It’s a type of loan that lets you access the equity that you have built up in your home without having to sell the property.

Most reverse mortgages give you a choice about how you receive the funds: As a lump sum payment, a regular series of payments, or a combination of both.
That can make a reverse mortgage loan a valuable source of extra cash in retirement. And the big plus of a reverse mortgage is that no repayments are necessary until your home is sold.

How to calculate a reverse mortgage

To use our reverse mortgage calculator, enter the period of time you expect to need the loan (this should be the number of years before you intend to sell the property).

Next, enter the current value of your home, followed by the payments you’d like to receive from the reverse mortgage.

You can also select how you expect the value of your home to grow. It can pay to take a conservative approach to this depending on where you live.

Our reverse mortgage calculator will show:

• How the balance owing on a reverse mortgage can grow over time, and 
• The impact of a reverse mortgage on your home equity as the years progress.

Reverse mortgage interest rates

Reverse mortgage interest rates do tend to be higher than for regular home loans. This makes it important to use our reverse mortgage calculator to understand the impact on your home equity over time. 

Reverse mortgage rates for seniors 

A reverse mortgage loan is a great option for pensioners and retirees that typically have a lot of their wealth tied up in assets. Starting from the age of 60, these loans allow seniors to convert the equity they have built up in their homes to cash that they can use as they wish. The other benefit is that unlike a traditional loan, in a lot of cases borrowers do not have to have a making an income at the time of application and the loan is typically only paid back when the borrower sells, moves out or passes away.  

How does a reverse mortgage work?  

A reverse mortgage allows you to take a loan as a lump sum, an income stream or a line of credit without having to make repayments while you
live in the home. Like a normal loan, interest continues to be charged on the sum, but unlike a normal loan, a reverse mortgage (including interest and fees) is usually repaid in full when your home is sold, you pass away or, most commonly, you move into aged care.

Reverse mortgage lenders

Not all lenders offer reverse mortgages. Talk to your Mortgage Choice broker to identify the reverse mortgage lenders and reverse mortgage interest rates suitable to your needs.

To find out more about reverse mortgages, please see our Reverse Mortgage Fact Sheet here.