Australia
Most people approaching reverse mortgages assume the limit is somewhere around 50% of their home's value. For a 60-year-old, the actual limit is typically 15–20%. The limits rise with age — but the starting point surprises almost everyone who hasn't looked it up.
These conservative limits are deliberate. They exist to ensure compound interest cannot grow the loan balance to exceed the property value during the borrower's expected lifetime.
The Age-Based LVR Table
Borrowing limits vary by lender but the following ranges reflect common market practice. All figures are indicative — confirm current limits with specific lenders.
| Age at Application | Approximate Maximum LVR |
|---|---|
| 60 | 15% – 20% |
| 65 | 20% – 25% |
| 70 | 25% – 30% |
| 75 | 30% – 35% |
| 80 | 35% – 40% |
| 85 | 40% – 45% |
| 90 | 50% |
LVR limits vary by lender and are subject to individual assessment.
The rationale: a 60-year-old may live for 30+ years. At 8% compound interest, a 20% LVR loan doubles in approximately 9 years. A conservative starting LVR ensures the loan balance cannot easily exceed the property value within the borrower's expected lifetime, protecting the No Negative Equity Guarantee.
How to Calculate Your Available Funds
The calculation is straightforward:
Maximum loan = Property value × Maximum LVR for your age
- Borrower age: 72
- Property value: $1,100,000
- Approximate maximum LVR at 72: 28%
- Maximum gross available: $1,100,000 × 28% = $308,000
If an existing mortgage must be cleared from the reverse mortgage proceeds, subtract it:
- Existing mortgage: $90,000
- Net available for other uses: $308,000 − $90,000 = $218,000
Any existing mortgage must typically be repaid from the reverse mortgage proceeds, or cleared separately, before the reverse mortgage is established.
For Couples: The Younger Borrower's Age Applies
When two people are on the property title, the borrowing limit is calculated using the age of the younger borrower. Both borrowers must be at least 60.
- Partner 1: age 76
- Partner 2: age 69
- LVR applied: approximately 24–26% (based on age 69, not 76)
The couple access a lower percentage of the property's value than a single borrower aged 76 would. The lender sets the limit using the younger age because the loan may need to remain in place for longer — with compound interest accumulating for more years.
This is an important consideration for couples with a significant age gap.
Talk to Key Choice Lending about your options.
Key Choice Lending has access to 72+ lenders and has supported Australian borrowers through more than $1 billion in transactions. Founder Matthew Clark is a two-time Amazon bestselling author and Better Business Award winner. Book a Strategy Session — no obligation, focused on your situation.
Draw-Down Structure and Its Impact on Interest
How you access the funds is as important as how much you can access — because compound interest accrues only on amounts actually drawn.
Lump sum: Full amount drawn immediately. Interest accrues on the entire balance from day one. Over 10 years at 8.5%, a $200,000 lump sum grows to approximately $450,000.
Income stream: Regular payments drawn over time. Interest accrues only on the cumulative drawn balance. More cost-efficient than a lump sum if the full amount is not needed immediately.
Line of credit: Draw what you need, when you need it. Interest accrues only on the drawn balance at any point. The most cost-efficient structure for borrowers who want access to funds without paying interest on unused amounts.
On a $200,000 approved line of credit, drawing $2,500 per month: in year one the average drawn balance is approximately $15,000. Total interest in year one at 8.5% is approximately $1,275. Compare this to a lump sum of $200,000 where year one interest is $17,000.
For most borrowers, the line of credit minimises compound interest growth and preserves more equity over time.
Fees and rates vary by lender and are subject to change — confirm current pricing with your broker.
The Valuation Determines the Limit
The reverse mortgage application requires a formal property valuation, not a real estate agent's estimate or an online automated valuation.
The loan limit is calculated on the valuer's figure. Properties in areas with limited comparable sales — regional properties, unique configurations, heritage-listed homes — sometimes receive conservative valuations. Where the formal valuation comes in lower than expected, the available borrowing limit falls proportionally.
Requesting a valuation through the lender before proceeding gives a clear picture of the actual available funds.
The One Projection Worth Requesting Before You Apply
Ask the lender to project the loan balance at your current rate and at the current rate plus 2%, over 10, 15, and 20 years — alongside a property value projection at 2%, 3.5%, and 5% annual growth.
The gap between the two sets of projections shows the equity remaining for your estate or future needs across a realistic range of scenarios. This single exercise defines the long-term cost of the product more clearly than any interest rate figure does on its own.
Book a Strategy Session. Make the Move.
The information provided in this blog is for educational purposes only and should not be considered financial advice. Always consult with a professional financial advisor or lender for specific lending decisions.
