Outstanding reverse mortgage balances in Australia hit $5.5 billion and are growing fast. But only about 11 lenders offer the product, the big four banks all exited the market, and the compounding maths means most borrowers end up with far less equity left over than they expected. This guide gives you the complete picture — including the government option almost nobody uses.
These are the questions most people have already searched for but couldn’t find a straight answer to. No jargon, no watered-down responses — just what you actually need to know before making a decision this significant.
No. Under the National Consumer Credit Protection Act 2009, all reverse mortgages issued in Australia after September 2012 include a statutory right of lifetime occupancy. You cannot be forced out of your home for as long as you continue to meet the basic loan conditions — which generally means maintaining home insurance, keeping up rates payments, and not leaving the property vacant for an extended period. This protection applies regardless of how large the loan balance grows. The only situation where you must leave is one you choose — selling the property, moving into aged care, or the death of the last borrower on the contract.
Legally, no — for all reverse mortgages entered into after 18 September 2012, the No Negative Equity Guarantee is mandatory under Australian federal law. This means that when the loan is eventually repaid — through sale, entering care, or upon death — you or your estate can never owe the lender more than the sale proceeds of the property. If the compounding interest and loan balance has grown beyond the property’s value at the time of sale, the shortfall is absorbed entirely by the lender. However, this protection applies at repayment, not at signing. If the housing market drops significantly and stays down, your estate may receive very little or nothing after the loan is settled — which is different from owing money, but still a real outcome to understand.
Yes, potentially — and this is one of the most underestimated complications. How a reverse mortgage affects your Age Pension depends entirely on how you take the money. Funds drawn as a lump sum are assessed as a financial asset by Centrelink for two years under the deeming rules, which can reduce your pension entitlement during that period. Funds drawn as an ongoing income stream may have different assessment treatment. The HEAS (government scheme) payments are specifically non-taxable and generally not assessed as income for pension purposes — which is a significant advantage. Before signing anything, get a written analysis from a financial adviser who specialises in Centrelink and aged care — the pension interaction alone can change whether a reverse mortgage makes financial sense for your situation.
The borrowing limit scales with your age and is set as a percentage of your property’s appraised value. As a general guide: at age 60, you can typically access around 15–20% of your property’s value; at 70, roughly 25–30%; at 80, around 35–40%; and borrowers aged 90 or over are capped at 45% under current APRA guidelines. On a property worth $800,000 and a borrower aged 68, that’s roughly $200,000–$240,000 maximum. But average initial draws are around $142,000 — and most borrowers are encouraged to take less than the maximum, because every dollar borrowed now is a dollar growing at 8.5–9% per year with no repayments. The maximum you can borrow and the amount you should borrow are often very different numbers.
None of the big four. Commonwealth Bank, Westpac, NAB, and ANZ have all exited this market. Bankwest withdrew effective January 2019. The active private market is now primarily specialist lenders: Heartland Bank (which holds roughly 40% market share), Household Capital, the Australian Seniors Advisory Group (ASAG), Gateway Bank, IMB Bank, and P&N Bank. The government’s Home Equity Access Scheme sits entirely separately as a Centrelink product — not a bank product at all. If you’ve found an older article mentioning Bankwest or Commonwealth Bank reverse mortgages, that information is no longer accurate.
Significantly. When you or your partner enters residential aged care, the loan typically becomes due and the property is usually sold. How the proceeds are treated in the aged care means-testing — specifically the Residential Aged Care means test — can affect what you pay in accommodation and care costs. Additionally, accessing equity early through a reverse mortgage can reduce the funds available to pay for aged care accommodation later, which is often the single biggest financial event of the final years of life. Aged care and reverse mortgage planning should be done together, not sequentially. There are financial advisers who specialise in both — they are worth the fee.
If your partner is not named on the reverse mortgage contract and the property is in your name only, the loan typically becomes repayable on your death — which may mean your partner has to sell the home or repay the loan from other funds. Some lenders provide a tenancy protection clause that allows a surviving non-borrower spouse to remain in the property for a set period, but this is not universal and the specific terms vary by lender. If you have a partner who lives in the property, both of you should be named borrowers on the contract. This is one of the most common and painful mistakes in this area — get legal advice specifically on this point before signing.
Yes — most private lenders allow voluntary repayments at any time without penalty, though you need to confirm this for the specific product. Making even occasional repayments can substantially slow the rate at which the balance compounds, preserving significantly more equity over a decade or more. This is worth thinking about if you have income from super or the Age Pension that exceeds your living costs — small voluntary repayments early in the loan have a disproportionate effect on the eventual balance. The HEAS allows repayment in full or part at any time, and the loan can also be repaid upon sale of the property.
The Home Equity Access Scheme is administered by Services Australia (Centrelink) and charges 3.95% p.a. — significantly below any private lender. If you meet the eligibility criteria, it deserves serious consideration before you approach a private lender.
The HEAS was called the Pension Loans Scheme until 2021, when it was renamed and expanded to include all Australians at Age Pension age — not just those receiving the pension. You borrow against your Australian real estate and receive payments fortnightly from Centrelink. The rate of 3.95% p.a. has remained unchanged since January 2022 and compounds fortnightly on the outstanding balance. No establishment fees or ongoing account fees apply, though legal costs for placing a caveat on your property title are charged — these can be paid upfront or added to the loan balance. The key limitation: no lump sums. Payments are fortnightly only, and the maximum fortnightly amount is capped at 150% of the maximum Age Pension rate. For singles this works out to approximately $36,000 per year; for couples, around $54,000 per year. You must be Age Pension age (currently 67) or older, and own Australian real estate with adequate insurance. Applications go through MyGov or a Centrelink service centre and typically take 4–6 weeks to process. The government places a charge (caveat) on your property title as security — similar to a standard mortgage.
On a $150,000 loan at 3.95% compounding annually, after 10 years you’d owe roughly $222,000. On the same loan at 8.99% (Heartland’s advertised rate), you’d owe approximately $354,000 — a difference of over $130,000 in interest. For borrowers who qualify, this gap is enormous. The HEAS fortnightly-only restriction is a real constraint for those needing a lump sum for home renovations or a one-off expense — but for supplementing regular income, the government scheme is substantially more affordable.
The private market is smaller than most people realise. Only a handful of specialist lenders are currently accepting new applications. Here’s what each one offers, who they suit, and what to watch for.
Heartland is Australia’s dominant reverse mortgage provider by a significant margin, holding roughly 40% of the market and 55% of new business. It was originally founded as Australian Seniors Finance in 2004 and merged with Challenger Bank in 2024, converting to a full banking licence. The current variable rate sits at approximately 8.88–8.99% p.a. — the exact figure can shift and should be confirmed directly. Eligibility begins at age 60, making it the most accessible private lender by age. Drawdown options include a lump sum (minimum $5,000), a monthly advance up to 10 years (minimum $300/month), or a cash reserve facility for drawing funds as needed. A secondary property loan against investment or holiday properties is also available — unusual in this market. The average loan runs 6 years; the average initial amount is around $142,000. Heartland’s fact sheet explicitly encourages borrowers to take only what they need — sound advice given the compounding rates.
Household Capital positions itself as a retirement-income specialist rather than a straight lender. Its product requires borrowers to nominate a retirement purpose — such as home renovations, topping up superannuation, funding aged care, or making an intergenerational transfer — rather than simply releasing cash. This purposeful approach is either a feature or a constraint depending on your circumstances. The standout offering is its protected equity facility, which allows you to formally ring-fence a percentage of your home’s value from the loan — ensuring a portion of equity is preserved for your estate regardless of how long you live. Rates sit in the high 8% range. Household Capital does not pay commissions to mortgage brokers and distributes primarily through fee-for-service financial advisers — which means you’re more likely to encounter it through a planner than through a comparison site.
Gateway Bank is a customer-owned mutual bank formerly known as Commonwealth Bank Employees Credit Union. It has become one of the most accessible reverse mortgage lenders through the broker channel, meaning a mortgage broker can submit an application on your behalf rather than requiring direct contact with the lender. Gateway’s reverse mortgage is available from age 55 — one of the lowest minimum ages in the market — and is accessible in most states. Being a mutual bank means Gateway is member-owned rather than shareholder-owned, which some borrowers view as a structural difference in terms of service priorities. Rates sit in the 8.5–9% range. Gateway’s products are available to the general public, not just former Commonwealth Bank employees.
The Australian Seniors Advisory Group (ASAG) acts as a specialist reverse mortgage brokerage connecting borrowers to a range of lenders including its own white-label product, with rates typically around 9.09–9.20% p.a. P&N Bank is a Western Australian-based mutual bank whose reverse mortgage availability is limited by state. IMB Bank serves the New South Wales and ACT markets. These lenders can be accessed meaningfully through a specialist reverse mortgage broker — someone who deals specifically in this product and can compare your eligibility and pricing across the active lender panel. For complex situations — couples with age gaps, borrowers with existing small mortgages to discharge, or those needing significant sums — a broker comparison across the full panel is more valuable than approaching a single lender directly.
The most important comparison in this market isn’t between two private lenders — it’s between the government scheme and all the private lenders combined. Here’s every material difference in one place.
| Feature | HEAS (Government) | Heartland Bank | Household Capital | Gateway Bank |
|---|---|---|---|---|
| Current interest rate | 3.95% p.a. | ~8.88–8.99% | ~8.5–9% | ~8.5–9% |
| Minimum age | 67 (Age Pension age) | 60 | 60 | 55 |
| Lump sum available | ✗ Fortnightly only | ✔ From $5,000 | ✔ Yes | ✔ Yes |
| Regular income stream | ✔ Fortnightly (Centrelink) | ✔ Monthly up to 10 years | ✔ Yes | ✔ Yes |
| Cash reserve facility | ✗ | ✔ Yes | ✔ Yes | Varies |
| No Negative Equity Guarantee | ✔ (from July 2022) | ✔ Statutory — all loans | ✔ Statutory — all loans | ✔ Statutory — all loans |
| Protected equity option | ✗ | ✗ | ✔ Up to 20% | ✗ |
| Establishment fees | None (legal costs only) | Application + valuation | ~1.5% of loan | Application + valuation |
| Centrelink impact (lump sum) | HEAS non-taxable income | Assessed as asset for 2 yrs | Assessed as asset for 2 yrs | Assessed as asset for 2 yrs |
| Fixed rate available | ✗ Variable only | ✗ Variable only | ✗ Variable only | ✗ Variable only |
| Who suits this best | Steady income top-up · pension-age borrowers · rate-sensitive borrowers | Flexibility seekers · under-67 · larger lump sum needs | Estate-conscious · purposeful borrowers · planner clients | Under-67 · WA/NSW borrowers · broker clients |
The legal protections are solid. The risks that actually catch people out are the ones that are technically disclosed but explained in a way that doesn’t convey how significant they are. These are the ones worth spending time on before you decide.
At 8.99% compounding annually, a loan balance doubles in approximately eight years. A $150,000 loan becomes $300,000 in eight years without a single repayment. After sixteen years it’s around $600,000. On a $700,000 property that grows at historical Australian property price averages (roughly 5–7% per year), there’s still equity remaining — but if property prices stagnate or fall for several years, which happens in many markets, the equity erosion accelerates dramatically. Use ASIC’s Moneysmart reverse mortgage calculator (moneysmart.gov.au) before signing anything — lenders are legally required to use it in their pre-contract discussions with you, and you should run your own scenarios independently.
Most reverse mortgage contracts specify that the loan becomes repayable when the borrower permanently vacates the property — and moving into residential aged care counts as permanently vacating. If your intention is to live in your home until you need care, and then use the home sale proceeds to fund that care, a large reverse mortgage balance can significantly reduce those proceeds. This is particularly acute because aged care accommodation costs (the Refundable Accommodation Deposit) frequently run $400,000–$700,000 in major cities — and a loan balance of $200,000–$400,000 on a property being sold to fund that deposit can mean the math doesn’t work.
If a property is held in one partner’s name only, and only that partner is named on the reverse mortgage, the surviving partner may be required to sell the home or repay the loan after the borrower’s death. Lenders are required to provide a tenancy protection warning when this situation applies, but the warning doesn’t solve the problem — it just discloses it. The solution is straightforward: list both partners as borrowers on the contract. This requires both to meet the age criteria, which can complicate things if there’s a significant age gap. A specialist mortgage broker or adviser can help navigate this specific scenario.
There are no fixed-rate reverse mortgages currently available in Australia — the market moved to variable-only products years ago. The rate you sign with today is not the rate you’ll pay for the life of the loan. Rates have moved materially in the last five years alongside the cash rate cycle. If rates rise from current levels — say, to 10–11% — the compounding effect accelerates substantially. The HEAS rate at 3.95% is also variable but is set by the government, not by financial market movements, and has proven very stable. This is another reason the HEAS rate advantage is more significant than the headline difference suggests.
Australian reverse mortgage borrowers have some of the strongest statutory protections in the world. Understanding these clearly means you can’t be talked into something that violates your rights — and it means the horror stories from pre-2012 products don’t apply to new loans.
Under the National Consumer Credit Protection Act 2009 (amended in 2012), every reverse mortgage entered into after 18 September 2012 must include a statutory No Negative Equity Guarantee. This means the total amount you owe at repayment — principal plus all accrued interest plus all fees — can never exceed the proceeds from selling the property at market value at that time. If it does, the excess is the lender’s problem, not yours. For HEAS borrowers, this protection was added from 1 July 2022 — it did not apply to earlier HEAS/Pension Loans Scheme participants.
The Act also provides a statutory right of lifetime occupancy. The lender cannot force you to vacate your property simply because the loan balance has grown to a level they’re uncomfortable with. The triggers for repayment are specifically defined: you permanently leave the property (including for aged care), you sell, you breach specific loan conditions (such as failing to maintain insurance), or the last named borrower dies. Rising debt alone is not a trigger.
Lenders are legally required to provide you with ASIC’s reverse mortgage information statement and to recommend that you seek independent legal and financial advice before entering into any contract. Some lenders require written confirmation that you have obtained that advice. This is not a box-ticking exercise — the pension, aged care, estate, and compounding interest implications of a reverse mortgage are substantial, and a general financial adviser may not have specialist knowledge in all of these areas. Look for an adviser who holds specific experience in both retirement income and aged care financial planning.
Reverse mortgage lenders are regulated credit providers under the National Credit Act and are subject to ASIC’s responsible lending obligations. APRA imposes LVR caps — currently 45% maximum for borrowers aged 90 or over — to ensure lenders maintain buffers against equity erosion. ASIC maintains a Moneysmart reverse mortgage calculator that all lenders are required to use when providing projections, ensuring scenario modelling is standardised and not cherry-picked to look optimistic. You can run the same calculator yourself at moneysmart.gov.au before any lender meeting.
This is the situation the HEAS was designed for. If you’re 67 or older, own your home, and need regular income rather than a lump sum, the HEAS at 3.95% is the first place to look. A single person could access up to approximately $36,000 per year on top of their Age Pension through HEAS — tax-free, fortnightly, and at a rate roughly half that of any private lender. Apply through MyGov or your nearest Centrelink service centre and use the HEAS eligibility calculator on the Services Australia website to estimate how much you could access before you apply.
The HEAS cannot help with a lump sum — that requires a private lender. Heartland Bank’s minimum draw is $5,000 and there’s no maximum beyond your eligible LVR. For home modifications, medical costs, paying out an existing small mortgage, or a one-off financial need, a private lender is the right path. Before you borrow, run the ASIC Moneysmart projections calculator to see what the balance will be in 5, 10, and 15 years at the current rate — then compare that to your property’s likely value trajectory. A 15-minute exercise with realistic numbers often changes how much someone decides to draw.
If you’re between 55 and 66, Gateway Bank is the most accessible private lender by minimum age. Heartland and Household Capital start at 60. Between 55 and 59, options narrow considerably — a specialist reverse mortgage broker who can access the full lender panel is worth contacting. Keep in mind that borrowing earlier means the loan has longer to compound, which can erode equity substantially by the time you need it for aged care. Borrowing at 60 at 8.99% means the balance doubles by approximately age 68 — which is worth modelling before you sign.
Yes, but the structure matters. Household Capital’s protected equity option allows you to formally set aside up to 20% of your home’s value from the loan, ensuring that percentage reaches your estate regardless of how the loan balance grows. Alternatively, taking a small initial draw and making voluntary repayments over time can preserve more equity than drawing the maximum and leaving it to compound. Many families have this conversation together — including adult children in the discussion about how a reverse mortgage is structured can prevent misunderstandings later. A specialist financial planner can model the estate outcome of different scenarios.
Use extreme caution with a reverse mortgage if aged care is on the near horizon — within 5 years is a meaningful threshold. The compounding interest, the loan repayment triggered by vacating the property, and the impact on the aged care means test can all interact in ways that reduce your options and your estate significantly. The property sale proceeds that fund your aged care Refundable Accommodation Deposit are often the single largest transaction of a person’s retirement. A reverse mortgage balance sitting against the property at that point can significantly reduce what you have available. Get specialist advice on aged care financial planning — ideally from an adviser who can model both the reverse mortgage and the RAD calculation together.
Start with two professionals, not one. A financial adviser registered with ASIC who specialises in retirement income can model the Centrelink, pension, and compounding interest scenarios for your specific numbers. A solicitor experienced in elder law should review any contract before you sign — particularly the tenancy protection provisions, the definition of “permanent vacation,” and the conditions that could trigger early repayment. Use ASIC’s free resources at moneysmart.gov.au and the HEAS calculator on the Services Australia website before any paid consultation. The National Debt Helpline (1800 007 007) offers free financial counselling if cost is a barrier. Talking to a lender’s in-house adviser before talking to an independent one is the most common way people end up with a product that’s right for the lender rather than right for them.
This guide is for general informational purposes only and does not constitute financial, legal, or taxation advice. Interest rates, lender eligibility criteria, HEAS limits, and regulatory requirements change regularly — verify all details directly with lenders and with Services Australia before making any decision. The impact of a reverse mortgage on Age Pension entitlements, aged care means testing, and estate planning depends on individual circumstances and should be assessed by a qualified financial adviser registered with ASIC and a solicitor with experience in elder law. National Debt Helpline: 1800 007 007. ASIC Moneysmart: moneysmart.gov.au. Services Australia HEAS: servicesaustralia.gov.au. This content is entirely original.