Retirees shouldn’t feel like they have to give up their home to combat cost of living pressures.

Research from RMIT University shows that financial products that facilitate access to home equity, such as reverse mortgages and home reversion arrangements, represent a viable solution to fill the retirement savings gap, as more Australians are entering retirement carrying significant debt that is difficult to service on their retirement income.

This research concludes that over 80% of senior Australians are homeowners, and for most the home represents their most significant store of wealth. It states that financing ageing in place can be via superannuation and other private savings, however there is a growing concern among many Australians that longevity risk together with rising costs of housing and living and reduced access to the age pension means that these ‘conventional’ vehicles for retirement will be insufficient to provide adequate support in late retirement.

As acceptance and awareness grows, the Reverse mortgages continue rise. In fact, with over a third of the market in Australia, Heartland has seen roughly a 20% annualised growth in its Reverse Mortgage business, as at 31 December.

As the leading provider of reverse mortgages in Australia, Heartland Finance General Manager – Reverse Mortgages, Sharon Yardley said, “More and more, over 60-year-olds are entering retirement with outstanding mortgage debt. In turn, reverse mortgages are increasingly being used for debt consolidation and to support the increasing cost of living including essential home or car repairs, to support family, or to upgrade their home.

“Approximately one third of new customers are now using a reverse mortgage to supplement their income so they can enjoy a more comfortable standard of living – which the age pension alone cannot fund or facilitate. We’ve seen the number of customers using their reverse mortgage for this purpose almost double, compared to last year,” said Sharon.

92% of Heartland’s customers would recommend taking out a Heartland Reverse Mortgage. If you’re over 60 and weighing up the costs of moving out, speak to your financial advisor to find out if a reverse mortgage could be a sensible option. If repayments are not made, the interest is added to the loan over time (compounding monthly) – the total loan is only repayable at the end of the term when you exit your home.

If you’d like to find out how one of Heartland’s customers made the decision to apply for a Reverse Mortgage, read: Heartland provides responsible retiree a sensible alternative to downsizing

Information provided is accurate as of 15 June 2023 and may change from time to time.