Australia Reverse Mortgage Calculator

With the proliferation of reverse mortgages, ASIC has launched a calculator to assist older Australians who are considering a reverse mortgage option.

Mindful of the significant increase in reverse mortgage products now on the market – from three up to 18 products in just the past two years – ASIC has developed the reverse mortgage calculator and has also reiterated some guidelines for consumers considering reverse mortgages.

Speaking in conjunction with the release of the calculator, ASIC’s executive director, consumer protection, Greg Tanzer said, “While reverse mortgages may provide a useful way to release equity in people’s homes, they involve significant risks and should be handled with care.”

“Because your debt builds up, taking out a reverse mortgage may be a move you cannot easily take back, locking you or your estate into a decision to sell your home at some future date,” Tanzer said.

Tanzer also recommends people get independent financial advice, have a solicitor review the contract and discuss their intentions with family.

The calculator shows the affect on the equity in the home under certain scenarios, such as how much you borrow, how long you borrow for, whether you take a lump sum payment and the effects interest rates and fees.

The reverse mortgage calculator is available at www.fido.gov.au.