01.Introduction

Reverse mortgages target homeowners aged 60 and older who want to borrow money against the value of their property.

The advantage of a reverse mortgage is that you don't need to make repayments on the loan until you move, sell or die. However you should be aware that it may restrict the flexibility of your financial arrangements.

Findings

• All participating providers meet the five CHOICE minimum contract standards, but only four meet the CHOICE good-practice standard.
• Some customers have missed out on interest rate cuts or loan top-ups because their provider no longer writes reverse mortgages.

How are CHOICE tests different? We buy all the products we test – we don’t accept industry freebies and we don’t take ads. We're non-profit and our work is funded by people like you.  

Institutions analysed

Australian Seniors Finance, Bankwest, Commonwealth Bank, Newcastle Permanent, Police & Nurses Credit Society, Police Credit Union, RBS, SGE Credit Union, St George Bank, Suncorp.

Who is missing:

• Some financial institutions have responded to the global credit crisis by suspending their reverse mortgage products. Bluestone, Lifeplan, Macquarie, Mariner, Over Fifty Group and Vision Equity Living all left the market between March and November 2008. 
• Transcomm and HomeStart declined to participate in this year's survey. 

What you'll get in this report

• Step-by-step guide explains how a reverse mortgage works, features to look for and pitfalls.
• Detailed features table for 10 reverse mortgages. Includes interest rate and fees.
• Checklist: What to consider and questions to ask.