Lender review
Is Household Capital a good reverse mortgage lender?
The short answer
A specialist reverse mortgage lender for homeowners aged 60 and over, offering no required repayments, lifetime occupancy and a guarantee against owing more than the home is worth. The cost is that interest builds on the loan, shrinking the equity left for the estate. It suits some retirees well and many others poorly.
How we rate them
Our assessment, not a lender claim. Five dimensions, scored out of five, revisited when the policy-checked date changes. Rate & fees is judged on the pricing borrowers actually transact at; with a reverse mortgage the real cost is how interest builds on the balance over time, so we score it cautiously.
- Rate & fees competitiveness
- 2.5/5
- Approval speed
- 3.5/5
- Technology & apps
- 3.5/5
- Product & policy flexibility
- 3/5
- Service
- 3.5/5
A reverse mortgage has no required repayments, so interest is added to the loan and builds on itself. An establishment fee and other charges apply. We show the projected cost over time before anything is recommended.
Can I get a loan with them?
Possibly, if every person on the title is 60 or older, owns the home personally rather than through a trust or company, and the home is in an accepted location. How much you can borrow depends on the age of the youngest borrower and the home value.
A reverse mortgage still has to pass a credit suitability test, so owning a home at 60 does not guarantee approval. Regular income is not required. Joint owners both need to qualify. Retirement villages and leasehold retirement communities are not accepted, and neither are purely commercial properties. A loan can be used to refinance a mortgage, pay for renovations, cover aged care costs, fund a regular income, or help family, and independent legal advice is required before the contract is signed.
What they will and will not do
Facts from the lender's current policy, not judgements.
- No: Australian Government 5% Deposit Scheme
- No: Help to Buy
- Yes: Refinance of an existing home loan
- Yes: Debt consolidation
- Yes: Regular income stream
- Yes: Aged care costs
- Yes: No required repayments
- Yes: Optional interest payments (ORIO)
- No: Construction loans
- No: Trust or company borrowers
- No: Borrowers under 60
Pros and cons
What works
- Lifetime occupancy and a No Negative Equity Guarantee: you keep ownership and can stay in the home, and if the loan grows beyond the home's value the amount owed is capped at the value.
- No required repayments on the Household Loan, and no need for regular income to qualify.
- You can draw funds as a lump sum, a regular income or a contingency fund, and repay at any time without penalty.
- Optional interest payments (ORIO) can slow or stop the balance growing.
- Independent legal advice is required before signing, and the lender's target market excludes vulnerable borrowers.
What doesn't
- The balance grows. Interest is added to the loan and builds on itself, so the equity left for you or your estate shrinks, sometimes sharply over many years.
- The loan becomes repayable on sale, after a stay in aged care, or after the last borrower dies or leaves the home, which can force a sale.
- Using funds can affect Age Pension entitlements, depending on how the money is used.
- Every title holder must be 60 or older, and companies and trusts cannot borrow.
- It is not for people who may sell soon or who have other assets they would prefer to use.
What are they distinctly good at?
Giving a retiree with a home and little cash a way to fund living costs, renovations, aged care or help for family without selling.
Household Capital is the funder behind Connective Reverse, and the range includes the Household Loan, two options that let you pay some or all of the interest (ORIO 50 and ORIO 100), and a Retirement Refi that replaces an existing home loan with one needing no regular repayments. It is a tool for a particular stage of life, and often the right answer is a different one, such as downsizing or using other savings, which we cover before recommending a reverse mortgage.
Who it suits, and who it does not
A good fit if
- Homeowners over 60 who want to stay in the home and accept that the equity left for the estate will fall.
- Retirees with a mortgage they can no longer comfortably repay.
- Those funding aged care costs or home modifications without selling.
Look elsewhere if
- People who expect to sell the home in the short term.
- Anyone who does not want the loan balance to grow, or who wants to leave the home to heirs undiminished.
- People with other assets, such as shares, they could use instead.
- Anyone under 60 on the title, or owning through a trust or company.
- People who feel pressured by family to release money, or who are in financial hardship.
Our verdict
A legitimate and well-protected product for a narrow group, and an expensive one for everyone else. The protections are real: lifetime occupancy, the guarantee against owing more than the home is worth, required legal advice and a target market that excludes vulnerable borrowers. The cost is equally real, because compounding interest eats into the equity your family might otherwise inherit. We take you through the projected balance over time, what it could do to the Age Pension, and the alternatives before a reverse mortgage is on the table.
We can arrange loans with this lender, through Connective Reverse, the Connective-branded range Household Capital funds.
Comparable lenders
Lenders that solve a similar problem, and that we can arrange.
Lender assessments are our own opinion, based on the policy and product terms in force on the policy-checked date shown above, and are not a recommendation.
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