Retirees are finding the reverse mortgage market difficult to negotiate as the comparison of products from leading lenders show they differ heavily on features, credit policies and post-settlement loan procedures, according to a reverse mortgage broker.
Seniors First chief executive Darren Moffatt said his business had conducted a detailed comparison of loan features, fees, eligibility criteria and lender policies of reverse mortgage providers and found there were more than 150 points of difference between the top four lenders alone, which added to the complexity in choosing a product.
“The reverse mortgage landscape in Australia is more complex than ever,” Moffatt said.
“Our research uncovered over 150 variables across just four lenders. That level of complexity is overwhelming for many over-60s who are simply trying to access the equity in their homes for cash, without making a costly mistake.
“From differences in drawdown limits and interest rates to rules around property types and age-based loan eligibility — it’s a minefield.
“For example, one lender might impose restrictions around the cash reserve feature that another doesn’t or they might scale back the available loan amount based on property type or location.”
He added the brokerage had seen a 300 per cent rise in inquiry volume over the past two years, which it assigned to cost-of-living pressures, misconceptions about how reverse mortgages work and a lack of clear, accessible information, with many older Australians unsure how to make an effective loan comparison.
“This isn’t a one-size-fits-all loan. Unless you’re a specialist broker, comparing reverse mortgages is almost impossible because most of the eligibility criteria is not public,” he said, noting this was a key reason retirees were turning to specialist reverse mortgage brokers to research the market.
“Retirees need personalised support from people who know the ‘hidden’ rules — not a generic sales pitch.”
