Reverse Mortgage Interest Rates and Fees

CANSTAR has researched interest rates and fees for a reverse mortgage. Here is what we found.

Reverse mortgage interest rates

When we researched reverse mortgages in Australia in late 2016, we found the following interest rates on offer:

 

Reverse Mortgage
Minimum Average Maximum
Interest Rate 6.19% 6.25% 6.37%

How do these interest rates compare to the rates on standard Principal & Interest home loans or Interest Only home loans with the home loan providers who also offer reverse mortgages?Source: CANSTAR, 2017. Based on a $90,000 loan amount and LVR of 15%, as at 04/01/2017

Standard Residential Variable
Minimum Average Maximum
Interest Rate 3.89% 4.94% 5.35%


Source: www.canstar.com.au, 2017. Based on a $90,000 loan amount and LVR of 15%, as at 04/01/2017.

To find out how much a reverse mortgage can cost over time, read this article.

 

Fees for reverse mortgages

reverse mortgage fees

The fees for a reverse mortgage seem to be very similar to the fees charged on a standard home loan, when it comes to the home loan providers who also offer reverse mortgages.

That is, of course, unless you would like to pay for certain extra features – which are also similar to those available on standard home loans. Based on the products researched, these were the average fees for a reverse mortgage:

Reverse Mortgage Fees
Upfront Fees Annualised Ongoing Fee Discharge Fee
Min $695.00 $0.00 $328.00
Average $872.50 $77.65 $367.00
Max $995.00 $144.00 $395.00

Source: CANSTAR, 2017.

 

These are comparable to the average fees for a standard home loan:

Residential Variable Home Loan
Upfront Fees Annualised Ongoing Fee Discharge Fee
Min $0.00 $0.00 $0.00
Average $546.27 $65.76 $257.24
Max $1,463.00 $400.00 $1,068.00

Source: CANSTAR, 2017.

To find out how much a reverse mortgage can cost over time, read this article.

Alternatively, you can try out our Home Loan Repayments Calculator to get an idea of how much a standard home loan would cost you, excluding fees.

Home Loan Repayments Calculator

Find an outstanding value reverse mortgage

Different providers offer different interest rates and fees on their reverse mortgage products, meaning the cost can vary greatly between providers. You should always do your homework carefully before making a decision.

Compare Reverse Mortgages with CANSTAR

 

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