Reverse mortgage calculator
Estimated time: 10 mins
The reverse mortgage
calculator helps you work out:
- How much your debt will increase over time and what this means
for the equity in your home
- How changes in interest rates and house prices could affect the
equity in your home
About this reverse mortgage calculator
About the reverse mortgage
This calculator is designed to help you see if using a reverse
mortgage could be worthwhile for you. This calculator allows you
- Explore 'What if?' scenarios to see the impact of interest rate
and home value assumptions on your home equity
- Save the input values and retrieve your calculations at a later
time. To save your inputs, set up a MoneySmart account or login to your existing one
(Internet connection required).
- Print the results of this calculator
The instructions set out in this calculator for the making of
equity projections have been approved by ASIC for the purposes of s
133DB(1)(a) of the National Credit Act and reg 28LD(2) of the
National Credit Regulations.
What is a reverse mortgage?
With a reverse mortgage you borrow money using the equity in
your home as security. Interest is typically added to your loan and
compounds over time. Repayments are generally not required while
you live in your home.
Equity is the part of your home that you own outright; it is the
balance you receive after your loan is repaid.
The outstanding loan is the total amount that you owe; it is the
total amount borrowed, including the accumulated interest and
The home equity you have in the future will depend on the
- The future value of your home
- How much you borrow and when
- Interest and fees
Amounts calculated are estimates; you may end up with more or
less equity in your home. This is not a prediction or a forecast
about interest rates or home values by ASIC. ASIC does not forecast
economic or market conditions or regulate residential property
The calculator assumes the following:
- Increase/decrease in property value - Your
house value is updated each year using the increase/decrease rate
entered in the calculator (Step 1). The calculations assume a
constant rate (although in reality this rate will rise and fall).
It is safer to enter a conservative property growth rate,
especially if you are looking for a reverse mortgage for 5 years or
less, as house prices may not increase at all and may even
- Interest rates - Interest rates will remain
constant over the life of the loan (although in reality interest
rates may fluctuate over time). Financial institutions may
calculate interest payments differently, which may vary outcomes.
Actual interest rates and fees may vary from those used in this
- Fees - Ongoing fees will remain constant for
the life of the loan (although in reality fees may vary over time).
Establishment fees are added to the loan.
- Outstanding loan - The loan is calculated each
month by adding any payments made to the borrower, interest charges
and fees to the outstanding loan balance from the previous month.
The calculator assumes that no repayments are made during the life
of the reverse mortgage.
- Home equity remaining - The remaining home
equity is calculated by subtracting the outstanding loan from the
value of your home.
- Negative equity protection - Mortgages taken
out on or after 18 September 2012 are subject to negative equity
protection. This means that you cannot owe the lender more than the
home is worth. If the home is sold the lender must accept the sale
proceeds as full settlement of the debt (except in cases of fraud
The results of this calculator are not advice in relation to a
financial product. You should consider obtaining advice from a
licensed financial adviser or credit provider before making any
financial decisions about a reverse mortgage.
You will need to satisfy the lending criteria of a credit
provider to get a reverse mortgage.
Whilst the Commonwealth, represented by ASIC ("ASIC"), is the
developer and owner of the Reverse Mortgage Calculator
("Calculator"), the Calculator is available for use by members of
the public as well as financial advisors and as such ASIC has no
direct control over the results generated by such Calculator. ASIC
therefore does not guarantee, and accepts no legal liability
whatsoever arising from or connected to, the accuracy, reliability,
currency or completeness of any data entered or assumptions
inserted when using such Calculator. Users should seek appropriate
independent professional advice prior to relying on, or entering
into any commitment based on any results generated by the
calculator. By entering ASIC's MoneySmart website and by using the
Calculator, the user will be deemed to have released and have
discharged ASIC, from all liability in respect of any loss suffered
as a result of relying on the information generated by the
The use of the Calculator by a financial advisor does not
constitute an endorsement or a recommendation by ASIC of any
products or services or of any third party products or services
offered by such financial advisor. ASIC hereby excludes all
liability to the extent permissible by law.
How lenders can use the
Lenders who use this calculator must choose their lender
institution from the drop-down menu within Settings . This will:
- Apply the lender's borrowing limits, including the LVR, minimum
borrower's age and maximum loan amount
- Enable lender to enter their contact details and/or Notes for
the client's reference in Step 7 of the calculator (optional
feature). These will appear in the printout from the calculator.
Note: Step 7 only appears if a lender is selected in Settings.
To find out more about how lenders should use this calculator
please see ASIC's Information Sheet.
To update lender limits or include a lender that does not appear
in the drop-down menu, please email firstname.lastname@example.org.
calculator FAQs - frequently asked questions
Q. How do I retrieve a saved calculator?
A. To retrieve a saved calculator, go to the relevant calculator
and click on the "select saved calculator" dropdown menu in the
toolbar (see example below) and select your previously saved
calculator from the list.
If you are not already logged in you will be asked to login. After
entering your username or email and password, you will be able to
select any previously saved results.
Q. Do calculators save data automatically?
A. No, you will need to click on the "Save" icon if you wish to
save your budget.
Q. Why can't I see your calculators on my iPad or iPhone?
A. This calculator was built using Flash at a time when Flash
was accessible to the majority of internet users. Since then, iPads
and iPhones have become very popular and they do not support Flash
files. The MoneySmart team are recreating all our calculators in a
format that will be usable on all devices. Unfortunately, this
process will take a while, so stay tuned!
Q. Are there advanced settings I can change?
A. Yes, within the calculators that you can save, there are some
defaults and assumptions that you can adjust as required. These can
be found within the "How it works" or "Settings" sections.
Q. Why doesn't it allow me to enter an age younger than
The reverse mortgage calculator will not let you enter an age
younger than 50 because most lenders will not offer a reverse
mortgage to anyone under age 60.
Q: I have entered my details but nothing happens, what do I do
A: Use the forward and back arrows at the bottom of the page to
go from one screen to the next.
Q: Can I change the default settings?
A: No, the default settings have been provided by individual
lenders offering this product.
Last updated: 28 Jul 2016