Can I reverse mortgage my house in a retirement village?

Reverse mortgages are coming back into the market at the moment, whereby people over the age of 60 can borrow against the value of their home and are usually only required to repay the borrowing and interest once the property is sold. You can read more about reverse mortgages here.

These types of mortgages should only be entered into after careful consideration and there are a number of criteria to fulfil before an application will be approved. 

To obtain a reverse mortgage, the property you are borrowing against must be mortgage free or almost mortgage free. Your age will determine what percentage of the value of your property you may borrow. 

Reverse Mortgages and Retirement Villages

When moving into a property in a retirement village the resident generally enters into an Occupation Right Agreement. This is different to a standard property sale and purchase because you do not purchase the property itself, but a right to occupy that property. 

This means that the resident does not own the property they reside in. Instead, the village retains ownership of the property and grants a right to the resident to reside there for their lifetime or until the Occupation Right Agreement is cancelled.

As a consequence, the actions that a resident can take in regard to their home are more restricted than the rights that they would have if they owned the property. 

As the resident does not own the property they cannot give someone the right to register a mortgage over the property itself and Occupation Right Agreements generally restrict residents from mortgaging their interest in the property (being the right to occupy the property).

This includes reverse mortgages.  This therefore means you cannot take a reverse mortgage over a unit in a retirement village. 

If you are considering getting a reverse mortgage against a property you own it is important to speak to an expert in the area to ensure that it is the right decision for you and your retirement planning and to find out if there are other options you could explore.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.