New research from Roy Morgan reveals that in the three months leading up to March 2023, an estimated 1.35 million mortgage holders (27.1%) were deemed ‘At Risk’ of experiencing ‘mortgage stress’ – the highest level in over a decade.

As financial conditions worsen, a Mortgage Business article predicts that the current economic environment may prompt older Australians to downsize earlier, allowing them to unlock equity and navigate the ongoing cost of living crisis. Furthermore, with the pension age set to rise from 65 to 67 this July, it is likely that older Australians will need to extend their working years to accumulate more superannuation to cover this gap.

However, recent research supported by Heartland and conducted by RMIT University shows that nearly 90% of older Australians express a desire to age in place, meaning they prefer to remain in their current homes instead of downsizing, moving into specialised care, or relocating to a different location.

For many older homeowners, downsizing did not appear to be the preferred solution due to the associated costs, both financial and physical, as well as the potential negative impact on housing satisfaction and the sense of community felt from remaining in their family home.

Don’t want to downsize? A reverse mortgage could be the solution

In many cases, older Australians can retain their family homes while utilising the equity through a reverse mortgage to support a comfortable retirement. A reverse mortgage functions similarly to a regular home loan and is specifically designed to cater to the needs and lifestyle of people as they get older and retirees.

Unlike traditional mortgages, no regular repayments are required with a reverse mortgage. Instead, the loan, including monthly accrued interest if unpaid, is repaid from the future sale of the property. Many Heartland customers choose to refinance existing credit, such as their existing mortgage, credit cards and/or personal loans, enabling them to decide when or whether they want to make ongoing repayments – alleviating some of the burden associated with mortgage stress such as monthly loan repayments.

Depending on the borrowing capacity, obtaining a reverse mortgage can also provide improved cash flow to cover daily expenses, home improvements, vehicle expenses, travel, and more.

Should the decision to downsize or sell the property arise in future, depending on credit criteria, a reverse mortgage could be used to fund necessary home improvements aimed at supporting its sale.

To find out more about how a reverse mortgage could help ease mortgage stress while allowing you to remain in your home for as long as you choose, please feel free to request an application pack or get in touch.

The information provided is accurate as of 1 June 2023 and may change from time to time.