By Darren Moffatt

October 30


Why do many people say reverse mortgages are not a good idea? 

Understanding and learning how far they have come can help you bust the myths around it. 

Here are four reasons why reverse mortgages have a bad rep: 


In the past, a lot of reverse mortgages were based on giving the customer the full amount of money upfront. 

While this may still have helped the customer, it meant interest was charged on the full amount drawn down from day one (even if the customer only needed the money gradually over time). 

This caused the loan (and the debt) to grow quickly. Today, the big focus is to encourage customers to only draw down the funds as they need them, which significantly reduces interest costs. 

For example, a new lender on the Seniors First panel gives the customer a debit card, a great way to only draw down a small amount of money as you go. 

Reverse mortgages have come a long way.


A reverse mortgage is a financial product for asset rich, cash poor Australians. 

If you have a good super, or a lot of money in term-deposits, a reverse mortgage may not be suitable. 

At Seniors First, there are instances that we talk seniors out of the loan as they would be better off using their own resources. We also make sure that our clients fully understand the implications. 

For example, there will be less to leave behind to your estate if you have a reverse mortgage. 

Some people are outraged by the thought of this (and can be highly critical of others who do not feel the same), while some people have no children, or wealthy children, who may feel differently. 

That is why it helps to talk to an expert at the start to guide you through all the implications, and make sure a loan like this is the right fit


Some people do not understand what life is like on the pension (especially a single pension). 

I have heard many people criticise reverse mortgages who have never been on the aged pension. 

People are often critical of things they do not understand. The single age pension has been described as a borderline poverty line. 

When you do not have enough money to pay for dental, house repairs, car maintenance, or health emergencies, people on the pension sometimes rely on credit cards at 18% – 20% interest. 

A reverse mortgage is between 5% – 6% interest, and you can still make repayments if you need to. Walk a mile in the shoes of a pensioner before criticising!

[ RELATED POST: How does a Reverse Mortgage affect your Age pension? ]


In the past, the interest rate on reverse mortgages was much higher compared to current rates. 

But nowadays, new applicants can get a very competitive rate between 5% – 6%.

Here’s the thing: no two reverse mortgages are the same. It really helps to talk to an expert about your needs and circumstances. 

We can explain the differences between lenders, the current rates and fees, and important considerations for your future.


To help you learn more about a reverse mortgage, you can download our free reverse mortgage guide.

You can also call Seniors First on 1300 745 745 to talk to a reverse mortgage specialist or visit www.seniorsfirst.com.au


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  1. Hi, I’m 69 and I still have $43,000 left owing on my mortgage!!
    Can still do this reverse mortgage.?
    I really don’t understand it and need someone to explain it in my English so I can get my head around it,
    I’m a widow on age pension

    1. Hi Carol,

      Thank you for your enquiry into Seniors First.

      So we can put you in touch with the correct state manager, Can you please confirm the state in which you do live?

      Kind Regards,
      Seniors First

  2. Hi. I am buying a new house but borrowing some money from a friend. I am 67. I don’t have a loan agreement. I am on a single pension. I am paying $645,000 for the house and I owe him $140,000. Can I use a reverse mortgage to part pay him back ?

    1. Hi Florence,
      Thank you for your enquiry into Seniors First.
      Our NSW state manager, Andrew Cate, Will be in touch with you shortly.
      With many thanks.
      Kind Regards,
      Mia Cusack

    1. Hi Helen, this is possible but only if the new reverse mortgage refinances/pays out the current home loan debt. To discuss further, please call 1300 745 745.

    1. Hi RW, we are a reverse mortgage broker – we’re not a lender and we don’t set the interest rates, but we do help people find lenders with lower rates.
      When you say that “Interest rates should only be one third of your asking rate” I think you are comparing to standard home loans. From a technical perspective, the products are very different. Reverse mortgage lenders will often not get any of their capital back from the borrower for 20-30 years, where as with a normal home loan repayments start immediately. It is mostly for this reason that interest rates are higher for a standard mortgage. I trust this clarifies. – Team SF

    1. Hi Peter, our team will contact you with details of the new reverse mortgage lender. Yes it is possible to refinance an existing reverse mortgage to another lender. Team SF

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