Reverse Mortgage Calculator
Breakdown
Free Senior Planning Guide
Practical guides to retirement, aged care and financial planning — straight to your inbox.
Reverse Mortgages: Understanding the Compounding Effect
The key risk of a reverse mortgage is compound interest — because no repayments are made, interest charges compound on the growing loan balance. Over 15-20 years, even a modest initial loan can grow substantially.
Government HEAS vs Commercial Options
The government Home Equity Access Scheme at 3.95% fixed is dramatically cheaper than commercial rates of 8.5-9.3%. The difference in total interest over 15 years is enormous. Always explore HEAS eligibility first.
How Maximum Borrowing Is Determined
The amount you can borrow is limited by your age and property value. Younger borrowers can access less equity (to account for longer loan periods). The formula is typically: (age - 60) x 1% + 15%, so a 70-year-old can access approximately 25% of their property value.
Projections assume constant rate and 3% annual property growth. Actual outcomes vary. Always seek independent financial and legal advice. No negative equity guarantee applies to all Australian reverse mortgages.