If you’ve taken out a Reverse Mortgage—or are thinking about it—you might be wondering:
“Can I ever save money by changing it later on?”
The answer is yes, in some cases, refinancing Reverse Mortgage can help you save thousands. Let’s explain how it works, when it makes sense, and what you need to watch out for.
Why Refinancing Might Save You Money
When you took out your Reverse Mortgage, a few things were true: interest rates were at a certain level, your home value was one amount, your age and borrowing limit were fixed. But things change. Here are ways refinancing can work in your favour:
- Home value has increased: If your property is now worth more, you may be eligible for a larger borrowing limit (or better terms) because your home equity has grown.
- Your age has increased: Many lenders allow higher loan-to-value percentages the older you are, so simply waiting may improve your terms.
- Better product offers: New Reverse Mortgage products may come with lower fees, more favourable interest compounding, or better options (like a flexible line of credit). If you refinanced into a better deal, you could reduce your lifetime costs.
- Debt consolidation or clearing an existing mortgage: If you still have a standard home loan, some seniors use a Reverse Mortgage to refinance out that conventional loan—eliminating monthly repayments and freeing up cash flow.
Put together: when these factors align, refinancing can reduce the growth of the loan balance, preserve more equity and therefore save thousands in interest and fees in the long term.
[ALSO READ: Retiring With Debt: The Growing Problem Facing Over 60s & How Reverse Mortgage Can Help]
Reverse Mortgage Refinance – Example
Let’s say you are 72, took a Reverse Mortgage five years ago on your home is worth $650,000. Since then:
- Your home’s value has grown to $800,000.
- Newer lender products allow a slightly higher loan-to-value ratio for her age.
- You refinance, clear old Reverse Mortgage and take out a new one with better terms.
By doing this, you may:
- Access more equity (so better financial flexibility now).
- Lock in lower fees or better borrowing terms.
- Reduce the amount your estate will need to repay later meaning more left for your family.
Over 10 or 15 years, the difference can add up into the thousands of dollars.
When Refinancing Makes Sense
Refinancing a Reverse Mortgage is not always automatically beneficial. It could make sense when you meet one or more of the following:
- Your home value has increased significantly since you first borrowed.
- Your age (or co-borrower age) qualifies you for a higher borrowing proportion.
- You have an older Reverse Mortgage product with relatively high interest/fees and newer products are better.
- You want to restructure the loan (for example, add a partner, convert to line of credit, or pay off existing debt).
- You’ve reviewed the costs of refinancing and the projected savings outweigh those costs.
CAUTION: some older loans may have exit fees or repositioning costs (valuation, legal fees, etc.) that reduce the benefit of refinancing.
What Seniors Should Ask Before Refinancing
If you’re thinking about it, here are questions to ask your broker:
- What are the total costs of exiting my current Reverse Mortgage (valuation, legal, break-fees)?
- What would the new loan amount & terms look like under the new product?
- What are the interest rate and fee differences between the old and new product?
- How will this affect my remaining home equity and what my estate may inherit?
- Are there any changes to Age Pension or Centrelink entitlements I should know about?
- Does the new loan allow full flexibility (line of credit, lump sum, etc.) if I want to change later?
- Am I simply increasing debt for the sake of it, or am I improving terms and position?
[ALSO READ: Can You Pay Out A Home Loan By Refinancing With a Reverse Mortgage?]
Key Risks to Keep in Mind
- Even though you may refinance into a “better” product, the loan balance still grows over time with interest/compounding, reducing your equity.
- If you refinance solely to borrow more, without improving terms or planning for repayment, you may end up worse off.
- If property values fall, or if you sell earlier than expected (downsizing, moved to aged care), you may have less leftover for your estate.
- Costs of refinancing may be high relative to benefits, so the savings must outweigh the exit and setup fees.
- Make sure you understand how the new loan terms differ from the old—what you’re gaining, what you’re giving up.
Is Refinancing Reverse Mortgages Worth It?
The short answer: Yes—refinancing a Reverse Mortgage can save thousands for seniors—but only when done for the right reasons, with good timing, and after full review.
If your home value has grown, you’re older (so eligible for better terms), you’re in a product with high fees/interest, or you want to restructure—then refinancing could be a smart move.
But if you’re simply refinancing without those advantages, you may not gain much, and could risk reducing what’s left for your future or your family.
Ready to Explore Your Options?
At Seniors First, we specialise in helping older Australians understand how to use home equity wisely. If you’d like to explore whether refinancing your Reverse Mortgage could save you money and align with your retirement goals, please get in touch. We’ll help you compare your current loan, estimate potential savings, consider the costs, and guide you through whether this strategy is right for you and your family.
Want to learn more about Reverse Mortgage? Find out more about how to use a Reverse Mortgage or download your FREE REVERSE MORTGAGE GUIDE.
Ready to Apply? You can now check your eligibility online or call Seniors First on 1300 745 745.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before you make any decision.