Types of mortgages

There is always the risk that rates will drop lower than the rate you’re fixed at.

If you want to make extra payments you may be charged a fee.

You may be charged a ‘break fee’ (which can be thousands of dollars) if you break your loan – for example if you decide to sell your property.

Floating rates are generally higher than fixed rates.

If rates go up, you may find repayments become unaffordable.

If you have irregular income, fixed regular payments can be difficult.

You need to be disciplined – if you don’t make repayments and continue to spend, you can end up in debt longer.

Any linked savings account don’t earn any interest.

Lenders may not offer reverse mortgages on some types of properties (e.g. farms, retirement properties).

A reverse mortgage allows you to stay in your home for as long as you wish, but it requires you to reside in the home or sell it. You cannot rent out your home and travel, or move into care, without selling the property and repaying the loan.


Since you aren't making regular repayments on a reverse mortgage, the effect of compounding interest can significantly increase your loan balance. This can erode the remaining equity in your home. Depending on the housing market at the time of sale, this could result in a substantial financial loss.

Higher initial payments make this lona more expensive in the short to medium term. It might be more affordable to make the same repayments under a table loan structure.