Home Mortgage

If you have no savings then you could consider adding to the mortgage on your home or taking out one on your home if it is already paid off.

Meeting interest and repaying the cost of the mortgage could be a problem if you are ill or having treatment which may stop you working and interest is not tax deductible.

And the cost of borrowing more if you already have a mortgage may not be affordable.

Reverse Mortgage

This has become a popular way of borrowing money against the equity in your own home. On death and settlement of assets, the money is repaid plus interest.

Interest rates vary between 8.45% per annum for a fixed rate loan to up to 12.5% for a variable loan.

Usually minimum amounts to borrow can be as low as $10,000 and the maximum $500,000 depending on the value of your home.

As in a regular home loan, there will be a range of conditions, including penalties for breaking the loan, minimum weekly or monthly payments, maximum time limits to repay and limits to equity reductions.

There have been some very bad products in the past but the industry has been changing. All will need careful examination before agreeing to a reverse mortgage.

A financial planner and accountant would be two people to seek advice from independently, advising on issues such as whether to take an initial lump sum payment or to spread income with regular payments, a combination of both or how much equity will be affected with future home value increases.

The Australian Investment Securities and Commission has a Reverse Mortgage Guide and calculator which will help you with your decision.