Reverse a Reverse Mortgage? Here's How to Do It Right

Is it possible to reverse a reverse mortgage in Australia?

Yes, you can pay off or reverse a reverse mortgage in Australia, though it requires careful planning. A reverse mortgage is a loan secured against your home equity, with repayment usually deferred until you sell or pass away. The main challenge in reversing it early is covering the total owed: principal, compounded interest and fees, which can be substantial.

Common ways to reverse a reverse mortgage:

• Lump-sum repayment: Use savings, inheritance or other funds to clear the balance.

• Refinancing with a standard loan: Replace it with a traditional mortgage or credit line, though this requires meeting income and serviceability criteria.

• Downsizing: Sell your property, repay the debt and buy a smaller home with the remaining funds.

Before acting, obtain an accurate payoff statement. Independent brokers, like those available through HeyNest, can help assess true costs, model options and connect you with lenders suited to your needs.

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What are the main options for refinancing to reverse the debt?

Refinancing is the most direct way to reverse a reverse mortgage without selling your home. However, shifting from a non-repayment loan to a standard mortgage requires eligibility and planning.

Main refinancing strategies:

• Standard home loan: For borrowers with reliable income such as superannuation, pension or part-time work.

• Specialised “exit” loan: Tailored to pay off high-interest debts like reverse mortgages, often with flexible terms.

• Family equity/guarantor: Family may help clear the debt or guarantee a smaller new loan so you can stay in your home.

Because senior refinancing is complex, independent brokers on HeyNest can identify flexible lenders, compare products and negotiate better terms, saving you time and confusion.

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Essential financial steps before you reverse a reverse mortgage

Reversing a reverse mortgage is a major financial move. These steps help ensure it improves your situation and reduces long-term debt:

• Get a full payoff statement: Confirm your total balance, including interest and fees.

• Assess your new serviceability: If refinancing, test your budget using online calculators to model payments at various rates and terms.

• Seek independent broker advice: A broker compares lenders and products across Australia to secure the most competitive deal and guide you confidently through the process.

Whether you’re in Sydney, Melbourne, Brisbane, Perth or regional Australia, HeyNest connects you digitally with independent experts who understand senior lending and how to successfully reverse a reverse mortgage.

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Frequently asked questions

Does interest continue to compound if I reverse a reverse mortgage?

Yes, until the full outstanding balance is paid off and the reverse mortgage account is closed, interest will continue to accrue daily.

Can I use superannuation to pay off the reverse mortgage?

If you have reached preservation age and met a condition of release, you can potentially use your super balance as a lump-sum to clear the debt.

What fees are involved in refinancing to reverse the debt?

Fees may include new loan application fees, valuation costs, government charges (like stamp duty on the new mortgage) and potentially a discharge fee from the original reverse mortgage lender.