Recent research from Money.com.au has shed light on a concerning trend – 31% of individuals aged between 35 and 60 expect to carry debts into their retirement, with 21% anticipating bringing mortgages or renovation loans into their golden years.

This is no surprise given that data from the Australian Bureau of Statistics shows that outright home ownership has more than halved for 25 to 54-year-olds between 2001 and 2021. Among 55 to 64-year-olds the proportion of mortgage holders has more than doubled, rising from 15.5% to 35.9%, and the number of people with a mortgage at retirement age or older (65+) has risen from 3.2% to 9.6%.

According to The Australian, carrying debt into retirement is due to bigger mortgages, lifestyle demand and surging inflation and interest rates.

Carrying debt into retirement can have a significant impact on people as they get older and in retirement, particularly with the pension being the primary source of income for most retirees. Sadly, many find themselves allocating their limited income to loan repayments, leaving little room for discretionary spending or fulfilling retirement dreams. After a lifetime of hard work and envisioning a comfortable retirement, this outcome falls short of the ideal.

Fortunately, there’s a solution that is gaining popularity among retirees facing such circumstances – reverse mortgages.

What is a reverse mortgage?

A reverse mortgage is like a normal home loan that has been designed for the needs of people over 60. It allows homeowners to continue living in their home, while releasing some of the equity to fund a more comfortable retirement, avoiding the potential physical, mental and financial impacts of downsizing.

The best part is, there is no need to make regular loan repayments, as the debt, including interest charged to the loan each month, is repaid when you move from your home (usually from the future sale of the property).

By refinancing a regular home loan into a reverse mortgage, retirees can experience greater financial flexibility. They can choose whether to make voluntary repayments over time, before the loan is due, thereby increasing cash flow and reducing financial stress during retirement.

Reverse mortgages also offer flexible drawdown options. As well as an initial upfront advance as a lump sum, you could also utilise the regular advance option as an income supplement (monthly, quarterly or annually for up to ten years), or set aside funds in a cash reserve facility (like a ‘line of credit’), which can be easily applied for through Heartland Finance Online, along with redraw for eligible loans.

Why choose Heartland as my reverse mortgage provider?

Since 2004, Heartland has helped over 26,000 senior Australians release the equity in their home to live a more comfortable retirement with our reverse mortgage.

Being a specialist lender, Heartland understands the needs of senior Australians and offers an award-winning, market leading product. With a flexible product, responsible fulfilment process, and considerable customer protections, Heartland is Australia’s leading reverse mortgage provider.

Could we help you refinance your loan to live a more comfortable retirement? Request our application pack to find out.

Information provided is accurate as of 5 September 2023 and may change from time to time.