Research reveals complexity and information gaps in the market
Older Australians are encountering increasing difficulties when seeking reverse mortgage products, according to new research and enquiry data from national brokerage Seniors First.
The firm reported a 300% rise in enquiries from Australians aged over 60 during the past two years. The broker noted that most enquiries focused on concerns about cost of living, misunderstandings about reverse mortgage products, and limited access to reliable information.
A reverse mortgage is a type of home loan designed for people aged 60 and over, allowing them to access the equity in their property without selling. Unlike traditional loans, regular repayments are not required; instead, the loan balance grows over time as interest and fees accumulate. The debt is typically repaid when the property is sold, the homeowner moves into aged care, or passes away, which can reduce the amount of equity left for heirs.
Recent research by Seniors First identified more than 150 differences in reverse mortgage offerings among the country’s four largest lenders. These variations include eligibility requirements, loan features, available loan amounts, total fees, and lender policies.
“The reverse mortgage landscape in Australia is more complex than ever,” said Darren Moffatt, chief executive of Seniors First. “Our research uncovered over 150 variables across just four lenders.
“That level of complexity is overwhelming for many over-60s who are simply trying to access the equity in their homes for cash, without making a costly mistake. From differences in drawdown limits and interest rates, to rules around property types and age-based loan eligibility – it’s a minefield.
“For example, one lender might impose restrictions around the cash reserve feature that another doesn’t, or they might scale back the available loan amount based on property type or location.”
Moffatt added that the availability of comprehensive and transparent information on reverse mortgages has not kept pace with the product’s growing popularity among older borrowers, leading to varying levels of financial confidence.
“This isn’t a one-size-fits-all loan,” Moffatt said. “Unless you’re a specialist broker, comparing reverse mortgages is almost impossible because most of the eligibility criteria is not public. Retirees need personalised support from people who know the ‘hidden’ rules – not a generic sales pitch.”
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