reversemortgageloans.com.auA reverse mortgage, followed through the years

A guide in plain words

Reverse mortgage loans: the loan over the years

A reverse mortgage is signed once and then lives for years, growing while the borrower stays in the home and makes no repayments. This guide follows one through that time, from the projections shown before signing to the day it is repaid. It is published by Dotto from the official sources listed at the foot of each page.

General information, not financial advice. The official place to check is Moneysmart’s page on reverse mortgages and home equity release.

One loan, drawn across twenty-five years

An illustration, not a forecast: each bar is the home, drawn to the same scale on every row, and the dark part is what is owed on it.

  1. At 60Home $600,000 · owed $100,000 · left $500,000
  2. At 65Home $695,564 · owed $140,255 · left $555,309
  3. At 70Home $806,350 · owed $196,715 · left $609,635
  4. At 75Home $934,780 · owed $275,903 · left $658,877
  5. At 80Home $1,083,667 · owed $386,968 · left $696,699
  6. At 85Home $1,256,267 · owed $542,743 · left $713,524

Illustration onlyWorked by hand for this guide, not output from any calculator and not any lender’s loan. A home worth $600,000 when its owner is 60, rising 3% a year, which is the house-price growth ASIC’s reverse mortgage calculator assumes unless it is changed. $100,000 borrowed once at 60, at 7% a year, the rate the calculator starts from when a loan’s own rate is not entered. Interest is added once a year to keep the arithmetic plain, with no fees, no further drawings and no repayments.

In this illustration, over those twenty-five years the amount owed grows more than fivefold, while the home roughly doubles. What is owed rises from a sixth of the home’s value to more than two-fifths. The guides below follow that gap, one stage at a time.

The $100,000 is about a sixth of the home, inside the range Moneysmart gives as the most a 60-year-old is likely to be able to borrow: 15 to 20% of the home’s value.

What a reverse mortgage is

A reverse mortgage lets a person borrow money using the equity in their home as security. Moneysmart defines equity as the home’s value, less any money still owing on a mortgage. The borrower stays in the home and does not have to make repayments while living there. Interest is charged on the loan and compounds over time, so the amount owed keeps growing. Moneysmart adds that the rate is likely to be above a standard home loan’s.

Moneysmart describes releasing home equity as an option for people aged 60 or older who own their home, and the notes to ASIC’s calculator say most lenders do not offer a reverse mortgage to anyone under 60. A borrower still has to meet the lender’s lending criteria.

The National Credit Code gives a reverse mortgage a legal meaning of its own. One of its conditions is that the debt may grow past the most that can be lent under the contract without the borrower being obliged to bring it back down. The guide to how the balance grows sets out what that means year by year.

Five guides, in the order the years bring them

  1. Before signing

    The projections you must be shown

    The three scenarios a lender or broker must show on ASIC’s calculator before assessing whether the loan is unsuitable, and how they reach the borrower.

  2. Every year

    How the balance grows

    Interest on interest, worked five years at a time, and the law’s own definition of a debt allowed to outgrow its limit.

  3. If the lines cross

    The no negative equity protection

    Why a reverse mortgage taken out from 18 September 2012 cannot leave a borrower owing the lender more than the home is worth, and when the law makes an exception.

  4. At the end

    When the loan ends

    Repaying early, the sale of the home, and the settlement steps and time limits of the government’s scheme.

  5. Alongside

    The Home Equity Access Scheme

    The Australian Government’s own loan against a home: who can get it, how much is paid each fortnight, and how its interest compounds.

Where the official word lives

About this guide

A worn wooden chair beside an old barrel and an enamel jug on a weatherboard veranda, next to a green screen door
A chair worn smooth by years of use on a weatherboard veranda. Photo by Ray_Shrewsberry on Pixabay.

Reverse Mortgage Loans is a guide published by Dotto. It explains how a reverse mortgage behaves over time and what the law and the official schemes say at each stage, from the sources listed at the foot of each page. Figures that change, such as the scheme’s interest rate, are given as they read on 8 October 2026, with the source linked.