Australian reverse mortgages entered into from 18 September 2012 have negative equity protection. This generally limits what the lender can recover to the home's market value. It does not guarantee that equity will remain for you or your estate; older loans should be checked individually.
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Can I end up owing more than my home is worth?
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Australian reverse mortgages entered into from 18 September 2012 have negative equity protection. This generally limits what the lender can recover to the home's market value. It does not guarantee that equity will remain for you or your estate; older loans should be checked individually.
Australian reverse mortgages taken out from 18 September 2012 have negative equity protection.
This means the amount recoverable by the lender is generally limited to the market value of the property. If the home is worth less than the loan balance when it is sold, you or your estate should not be required to pay the remaining shortfall from other assets.
Borrowers with a reverse mortgage entered into before 18 September 2012 should check their contract to determine whether equivalent protection applies.
Negative equity protection is valuable, but it should be viewed as a final safeguard rather than a financial goal. It protects against an additional debt. It does not guarantee that enough equity will remain to fund aged care, buy another home or provide an inheritance.
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Sources
Useful tool: try our projection calculator with your own example figures.
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