Abstract:

Many older people and government are interested in how the money from the accumulation of assets such as in the family home can be accessed. There are several key factors impacting the examination of Reverse Annuity Mortgages (RAMs) used by older people in terms of possible growth factors and the potential implications for their retirement decisions. These factors include understanding issues pertaining to: Australian retirement and homeownership patterns, retirement income, the types of reverse mortgage products available, and the economic drivers impacting the reverse mortgage market. Consequently, reverse mortgages are by far and away the most popular of the reverse equity product types on offer in Australia and as a consequence were the focus of this research project. The pension and taxation reviews currently underway in Australia is considering a range of reforms, such as whether the family home should be included as part of the means test for the age pension. At this point though the family home remains exempt in this consideration and a reverse equity loan is non-assessable under the income test depending on a number of factors1 . Further, the Social Securities Act also clearly limits the principal home asset exemption to someone who does not have another principal home.