Our low variable interest rate

We offer the lowest comparable reverse mortgage interest rate in Australia on our Household Loan reverse mortgages

5.15%
Variable rate
5.21%
Comparison rate*

How do reverse mortgage interest rates work?

As with all loans, interest is charged on the funds you receive from a reverse mortgage. Whether you receive regular drawdowns or a lump sum payment, interest is charged on the total amount drawn from your reverse mortgage. Interest is calculated daily but only compounded (added to the loan balance) monthly.

Most loans require monthly minimum payments to repay the loan balance and associated interest charges; a reverse mortgage defers loan and interest repayment to when the loan matures.

However, in the case of a Household Loan, you can elect to make monthly interest repayments to avoid compound interest.

Are reverse mortgage interest rates fixed or variable?

Reverse mortgages are only available with variable rates. The main benefit of this is that you have flexible repayment options.

A Household Loan may be repaid, in part or full, at any time without penalty.

Why are reverse mortgage interest rates higher than standard mortgages?

Reverse mortgage interest rates are generally higher than a standard mortgage because there is no obligation to make any repayments until the end of the loan.

What is compound interest?

While no regular repayments are required, interest and any fees added to the loan balance will compound over time.

Compound interest means that you pay interest not only on the amount you have borrowed but also on the interest (and any fees) charged…or, simply, you pay interest on the interest for the duration of your loan.

Over time, the amount you owe will increase, and the longer you have the loan, the more the interest compounds and the larger the amount you have to repay.

Case study

The following case study illustrates the impact of compounding interest on a total loan. However, as shown, a modest appreciation in the value of the home can help to offset the effect of compounding interest over time.

Compound interest is why finding a low-interest rate matters. A lower rate means there is less interest compounding over the life of the loan. This ultimately results in you owing less at the end of the loan and, therefore, retaining more equity in your home.

Calculator
Compound Interest & Home Equity

Our Household Loan fees

Description Fee
Establishment Fee (includes valuation and conveyancing) 1.5% of Loan Amount
Special attendance fee (e.g., variation or substitution of security, discharge of mortgage) $250 per attendance plus third-party fees
Fee for provision of paper copies of documents $25 per request
Drawdown fees Nil
Regular service fees (monthly, annual) Nil
Early repayment fee Nil

*The Comparison Rate is based on a loan of $150,000 for 25 years. WARNING: this comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.