A reverse mortgage lets retirees aged 60+ borrow against their home equity without making repayments. Interest compounds against the loan, repaid in full from the sale proceeds when the borrower moves into care or passes away. Since 2012 all NCCP-regulated reverse mortgages carry a 'no negative equity guarantee' — you (or your estate) can never owe more than the home's sale value, regardless of how much interest has accrued.

Maximum loan amount scales with the borrower's age: typically 15% LVR at 60, rising about 1% per year, capped around 45% at 90+. Couples use the younger borrower's age for the LVR cap (since the loan can run for the surviving partner's whole life). Interest rates are typically 1.5-3% above standard variable rates because the lender carries the no-negative-equity risk and waits years for repayment without intervening cash flows.

Common use cases: aged care entry costs, home renovations to age in place, supplementing the Age Pension, paying off a remaining mortgage to free up cash flow. Watch the Centrelink interaction — drawn cash sits as a financial asset and is deemed for income test purposes. The compound interest also eats into the eventual estate value: at 8.5% with no payments, the loan doubles in about 8.5 years. For retirees with significant unused super or other assets, downsizing or accessing super via the account-based pension is usually cheaper. Free advice is available via the National Debt Helpline (1800 007 007) before signing.