Reverse mortgage interest rates in Australia 2025
Reverse mortgage interest rates in Australia range from 3.95% (the government Home Equity Access Scheme) to 9.3% (private lenders) as of July 2025. Every rate is variable and subject to change. Stryve compares rates across 40+ lenders and discloses all lender commissions upfront. You see the full picture, not a curated selection. If you are considering [reverse mortgages in Australia](/services/reverse-mortgage), the first question is always about cost. This page covers current reverse mortgage rates australia-wide, how compound interest affects your balance, every fee you will encounter, and proven strategies to reduce what you pay.
Current reverse mortgage rates by lender
These are the current reverse mortgage rates australia borrowers can access from private lenders, verified as of July 2025. All rates are variable and can change without notice. You will notice these rates sit well above standard variable home loan rates, which are closer to 6% to 7%. The reason is structural, not opportunistic. A reverse mortgage lender receives no repayments for an unknown period, sometimes decades. That lender funds your loan today and waits until you sell, move into aged care, or pass away before recovering a cent. The interest rate reflects the cost of that open-ended commitment. This is not a mark-up for profit. It is the price of a product designed to let you stay in your home without making repayments. For eligibility criteria, maximum loan-to-value ratios, and feature-by-feature breakdowns, [compare reverse mortgage lenders](/services/reverse-mortgage/lenders) in our full lender profiles.
| Services | Lender | Variable rate | Comparison rate | Lump sum available | Line of credit available | Ongoing monthly fee |
|---|---|---|---|---|---|---|
| Heartland Finance | ||||||
| Household Capital | ||||||
| Gateway Bank | ||||||
| IMB Bank | ||||||
| P&N Bank |
How compound interest grows your reverse mortgage balance
The worry most people have is that interest will consume their equity. Here is what happens, in exact numbers.
Compound interest means you pay interest on your balance, including interest already charged. Because you make no regular repayments, the balance grows each period, and the next period's interest is calculated on that larger number.
Worked example: $100,000 loan at 9.0%, no repayments
| Year | Loan balance | Property value | Remaining equity |
|---|---|---|---|
| 0 | $100,000 | $750,000 | $650,000 |
| 5 | $153,862 | $869,564 | $715,702 |
| 10 | $236,736 | $1,008,226 | $771,490 |
| 15 | $364,248 | $1,169,020 | $804,772 |
| 20 | $560,441 | $1,355,402 | $794,961 |
$560,441 is a large number. Look at the column beside it. On a $750,000 property growing at 3% annually, you still hold $794,961 in equity after 20 years.
All NCCP-regulated reverse mortgages carry a no-negative-equity guarantee. You will never owe more than your home is worth. It is a legal requirement under the National Consumer Credit Protection Act 2009.
ASIC requires credit licensees to use the Moneysmart reverse mortgage calculator as part of responsible lending obligations. You can access it directly at moneysmart.gov.au.
Your property value, loan amount, and rate will differ. Use the reverse mortgage calculator to model your own scenario.
The HEAS rate of 3.95%: cheaper, but not for everyone
The Home Equity Access Scheme charges 3.95% per annum as of July 2025. That is less than half the rate of any private lender.
The reason is straightforward. The Australian Government is not a commercial lender seeking a return. HEAS exists to supplement Age Pension income for retirees who own property but need more cash flow.
The 3.95% HEAS rate is effectively a comparison rate because there are no application fees, no ongoing fees, and no establishment charges. The advertised rate is the true cost.
Here is the limitation. HEAS pays fortnightly instalments only, up to 150% of the full Age Pension rate. It does not offer lump sum access.
When HEAS is the right choice: you want to supplement fortnightly income, you receive a part pension and need to top it up, or your need is ongoing and predictable.
When a private reverse mortgage fits better: you need a lump sum for home modifications, medical costs, or aged care, you want to clear an existing debt in full, or you need flexible access to funds on your own schedule.
Some borrowers use both. HEAS covers the ongoing income need at 3.95%, while a smaller private reverse mortgage handles a one-off lump sum.
Every fee you will pay on a reverse mortgage
Here is every reverse mortgage fee you will encounter in Australia. No surprises, no fine print. Most fees can be capitalised into the loan, meaning no out-of-pocket cost at settlement. Be aware: capitalised fees attract compound interest for the life of the loan, so a $950 fee today costs more than $950 over time.
Application / establishment fee: $0 to $950
Some lenders waive this fee entirely. Others charge up to $950 and allow you to add it to the loan balance rather than paying upfront.
Valuation fee: $300 to $600
A licensed valuer assesses your property before approval. The cost depends on your property type and location. Rural or unusual properties sit at the higher end.
Settlement and legal fees: $500 to $1,500
Covers the legal work to register the mortgage. You will also need independent legal advice, which is a regulatory requirement for all reverse mortgages in Australia.
Ongoing service fee: $0 to $15/month
Heartland and P&N Bank charge no ongoing fee. Other lenders charge between $8 and $15 per month, added to your loan balance each period.
Government charges: varies by state
Mortgage registration and discharge fees are set by your state or territory government. In NSW, mortgage registration costs $154.60. Other states differ.
Early exit fees: rare
Most lenders do not charge early repayment penalties on reverse mortgages. Confirm this with your lender before signing, as a small number of products carry a discharge fee in the first few years.
Why the comparison rate matters more than the headline rate
A reverse mortgage comparison rate folds all fees into a single annual percentage, giving you the true cost of the loan rather than the advertised rate alone.
Here is a concrete example. A lender advertises 8.99% variable. Add a $950 establishment fee and a $10 monthly ongoing fee, and the comparison rate rises to approximately 9.15%. That 0.16% gap represents real money over a 15 or 20-year loan life.
Reverse mortgages have no regular repayments, which changes the calculation significantly. The compounding effect of capitalised fees makes the gap between headline and comparison rates wider than on a standard mortgage.
Not all lenders publish comparison rates for reverse mortgages. Stryve calculates the effective comparison rate for any product during a consultation, so you can compare on equal terms.
One thing worth knowing about aged care. The outstanding balance on a reverse mortgage is assessed in the aged care means test. A higher balance can reduce your entitlement to government-subsidised residential care. This is a factor to discuss with a qualified financial adviser.
Four ways to reduce what your reverse mortgage costs you
Make voluntary partial repayments
Most reverse mortgages allow repayments at any time without penalty. Even modest amounts disrupt the compounding cycle. Paying $200 per month on a $100,000 loan at 9% can reduce the 20-year balance by over $150,000. Use the [reverse mortgage calculator](/calculators/reverse-mortgage) to model the impact of different repayment amounts on your specific loan.
Choose a line of credit over a lump sum
You pay interest on drawn funds, not the approved limit. If you need $80,000 over time, drawing $20,000 per year means four years of lower interest charges compared to taking the full amount on day one. The difference in total cost can be substantial.
Split between HEAS and a private loan
If part of your need is ongoing income and part is a one-off sum, use HEAS at 3.95% for the income component and a smaller private reverse mortgage for the lump sum. Funding $30,000 per year through HEAS instead of a private lender saves thousands in annual interest.
Review your loan annually
Rates change. New lenders enter the market. Your circumstances evolve. An annual review with an independent broker ensures you hold the best available rate. Stryve provides this review at no cost for existing clients.
Common questions about reverse mortgage rates and fees
See how reverse mortgage rates apply to your home
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