Can retired people get a mortgage?

Reverse mortgages allow homeowners aged 60 and over to borrow against the equity in their home without regular repayments. Funds may be offered as an income stream, line of credit, lump sum, or a combination. The loan and interest are usually repaid when the property is sold.

You can use the money for anything from renovations to daily living expenses. However, because interest compounds over time, your equity and what you leave to loved ones may be reduced. A reverse mortgage may also affect your age pension eligibility. Learn more at the government’s MoneySmart website. 

Previously known as The Pension Loans Scheme, The Home Equity Access Scheme is a government-run program managed by Services Australia. It’s designed to help Australians of retirement age access extra funds by using the value of Australian real estate they own as security for a loan. You can receive the funds as fortnightly payments, a lump sum, or a combination. The loan is repaid with interest when the property is sold, or it can be transferred to another eligible home if you move.

Like reverse mortgages, interest compounds over time, which may reduce your equity and what you leave to loved ones.

Some lenders offer traditional mortgages to retirees, although approval depends on your income, assets and ability to cover living expenses. You may also be asked for an exit strategy, to show how you’ll repay the loan.

These loans can lead to owning your home outright, but they require regular repayments, which means less money in your pocket to fund your retirement living needs. If your main source of income is the age pension, borrowing limits may be lower, requirements stricter and interest rates higher.

You cannot use a mortgage to fund retirement living in a BaptistCare retirement village.

At BaptistCare, we understand everyone’s financial situation is different. We offer flexible financing models designed to suit your needs and give you peace of mind about your future.

For our NSW and ACT retirement living properties, we offer a Loan Licence Agreement. It includes three key components: 

1.  Ingoing contribution 

Also called your entry payment, this is paid as an interest-free loan to BaptistCare. Benefits include no stamp duty, no capital replacement costs, no refurbishment or resale costs when you leave, and a guaranteed refund option within 90 days of moving in. 

2.  Ongoing fees 

Known as the recurrent fee, this covers the running costs of the village, including council rates, building insurance, home and grounds maintenance and staff. A detailed budget is provided annually and available on request. 

3.  Deferred Management Fee (DMF) 

Payable when you leave, the DMF helps fund the ongoing improvement of village services. It’s capped and calculated over your first six years. You’ll receive your ingoing contribution back, minus the DMF, unless you select a 100% DMF option. You can choose to pay more upfront for a smaller DMF later, or less upfront with more deducted when you leave.