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Property Equity &
Transition Finance Options
There are a number of finance options available to people who are considering accessing the equity in their property or planning a transition to a new home.
The information below outlines two different types of lending options that may be available in certain circumstances.
Each option works in a different way and is designed to meet different needs, time frames, and objectives.
Reverse Home Loans
Reverse Home Loans are designed for individuals aged 60 years and over who wish to access the equity in their home, holiday home, or investment property. These loans generally do not require repayments during the life of the loan and are typically repaid when the property is sold or upon the passing of the last surviving borrower. The property remains in the borrower’s name, and funds can usually be received in a variety of ways depending on the lender and the borrower’s circumstances.
Advantages and Disadvantages of Reverse Home Loans:
ADVANTAGES:
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No monthly repayments are required during the loan term. All costs (e.g., interest and fees) are generally payable when the loan is repaid.
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May not affect Social Security or Medicare, depending on individual circumstances.
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Income received from a reverse mortgage is typically not taxable.
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Eligibility is usually based on property value rather than income.
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Payments can often be received in several different ways.
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If the property sells for less than the loan balance, lenders generally cannot seek repayment from heirs (subject to lender terms and regulatory protections).
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Funds can generally be used for a wide range of purposes.
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The amount available to borrow may increase as the borrower’s age and property equity increase.
DISADVANTAGES:
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Once the borrower/s passes away, the loan must be repaid before the title can be transferred to heirs.
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Interest is compounded over time and generally cannot be deducted from income tax until repaid.
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As equity reduces with each drawdown, there may be less equity available for future needs.
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Reverse mortgages commonly offer variable interest rates.
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Interest rates and fees may be higher than those of standard mortgages.
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Borrowers must continue paying property rates, insurance and maintain the home; failure to do so may affect the loan.
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When closing the loan, any existing mortgage must be repaid, either with personal funds or from the reverse mortgage proceeds.
Bridging Finance (Alternative Option)
Bridging finance is a short‑term loan option that may allow individuals to purchase a new property before selling their existing home. It uses the equity in the current property to help fund the new purchase, providing flexibility and reducing the pressure of buying and selling at the same time. The loan is typically repaid once the existing property is sold.
ADVANTAGES:
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May allow you to buy a new home before selling your existing property, subject to lender approval.
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Provides greater flexibility around settlement timing.
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May reduce or avoid the need for temporary accommodation.
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Loan is generally short‑term and repaid once the existing property is sold.
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Uses equity in your current home rather than relying solely on income.
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DISADVANTAGES:
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Interest and fees are charged and are usually capitalised during the loan term.
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Loan terms are limited (commonly 12–24 months).
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Property market conditions may affect the sale of your existing home and your exit strategy.
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Not suitable for long‑term funding needs.
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A full assessment of property values, equity position and repayment strategy is required.
Which Option May Suit You?
A reverse home loan may suit customers seeking longer‑term access to equity without required repayments, while a bridging finance solution may suit those planning a short‑term transition between properties. Both options have benefits and risks and are not suitable for everyone.
The right solution depends on your age, objectives, property values, timeframes and overall financial position.
Important Notes
This information is general in nature and does not take into account your personal objectives, financial situation or needs. Product features, eligibility criteria, costs and risks vary between lenders and may change at any time. Before making any decision, your full financial situation should be assessed to determine whether a particular option is appropriate. You should also consider seeking independent legal and financial advice.