The Increasing Acceptance of Reverse Mortgages in Australia

In Australia the number of providers of reverse mortgages has risen substantially in recent years. It has been promoted to seniors as a means of accessing equity locked up in a residential house, especially after the owner/s has retired. Although there have been some teething problems, the concept of mortgaging the family home after achieving freehold ownership has many merits. Often an asset-rich household must survive on relatively small regular income, and is unable to access the increasing wealth of the family home. A reverse mortgage overcomes this hurdle. This paper investigates the sudden rise in demand for reverse mortgages in Australia. It identifies providers in the marketplace and reviews the types of products available. Strengths and weaknesses of this product are contemplated, and the viability of reverse mortgages is discussed. Although there are obvious benefits for certain segments of society, reverse mortgages are a unique product and caution should be exercised to ensure the public is fully knowledgeable from the outset.