IF CONDITIONS STAY THE SAME

STAY IN THEIR HOMES

BE INDEPENDENT FROM FAMILY

MAINTAIN THEIR QUALIT Y OF L IFE

IF INTEREST RATES RISE BY 3%

IF PROPERT Y PRICES REMAIN STAGNANT

A reverse mortgage allows older Australians to borrow against the equity in their home. Repayments are not required until a later time, typically when the borrower has vacated the property or passed away. This can help borrowers unlock the wealth in their home while continuing to age in place

ASIC found that reverse mortgages helped people stay in their home, but

there can be long term risks

OFTEN NEEDED FOR

$500bnAustralian home equity held by consumers over 65

of Australians aged 55-85 own their own home

70%

DAILY EXPENSES BILLS AND DEBTS HOME IMPROVEMENTS CAR EXPENSES

An ageing population and other factors could influence demand for reverse mortgages

OF BORROWERS MAY END UP WITH LESS EQUIT Y THAN THE AVERAGE UPFRONT COST OF AGED CARE FOR ONE PERSON BY THE T IME THEY REACH 84

63 %

This house is very precious, we want to be here as long as we can

There might be risks, but we just live for today and not worry about tomorrow.

We don’t want our kids carrying us financially

It will let us just enjoy what time we have left in our home

4% 10% 26%

By taking a reverse mortgage, borrowers could

face financial difficulty later in life

Download the full version of the report.

REQUIRE LENDERS TO IMPROVE THEIR PRACTICES

AND AMEND THEIR LOAN CONTRACTS

REDESIGN THE MONEYSMART REVERSE

MORTGAGE CALCULATOR

MONITOR INDUSTRY INIT IATIVES TO REDUCE THE RISK OF F INANCIAL

ELDER ABUSE

REVERSE MORTGAGES HELPED OLDER AUSTRALIANS ACHIEVE THEIR

IMMEDIATE F INANCIAL GOALS

BORROWERS CAN STRUGGLE TO RECOGNISE THE LONG TERM

RISKS OF THEIR LOAN

OF NEW LOANS FROM 2013 TO 2017

We could be left with less wealth than we imagined...

of borrowers might have less than $200k of remaining equity by the time they reach 84

WROTE

CREDIT L ICENSEES

2OF THE DOLLAR VALUE

80%

ASIC WILL

In addition to an ageing population, many other factors are

increasing the relevance of these loans for older Australians

Borrowers had limited choices for reverse

mortgages due to a lack of competition

Due to the effect of compound interest over time

CASH POOR, FEW OTHER ASSETS

THE AVERAGE BORROWER

$118,627 $632,598 26%

AVERAGE LOAN AVERAGE HOME VALUE AVERAGE LOAN-TO-VALUE RATIO

$0

$100,000

$200,000

DURATION OF LOAN (YEARS)

INTEREST CHARGES ON AN AVERAGE LOAN

0 1510

$7,706

5

1 YEAR

$43,8705 YEARS

$103,96310 YEARS

$186,27915 YEARS INTEREST

And changes in the growth of property prices can

significantly affect how much equity borrowers

will have at the end of their loan

$0

$800,000

$400,000

$1,200,000

DURATION OF LOAN (YEARS)

0 15105

EQUIT Y

Starting equity ($513,971)

$1,206,3555% GROW TH

$717,0763% GROW TH

$240,4090% GROW TH