Heartland Bank reverse mortgages: A guide

Heartland Bank is one of Australia's leading providers of specialist banking products, commanding more than 44% of the reverse mortgage market as of 2024. 

The bank first began offering reverse mortgages in 2004 as part of the Heartland Finance group before securing its banking license in mid-2024. The Heartland group has been in the business of providing financial services since 1875.

What is a reverse mortgage?

A reverse mortgage is a home loan product, but one that's vastly different to the typical mortgage. It's a type of equity release product that allows seniors and retirees to borrow money using the equity in their home as security for the loan.

Reverse mortgages don't demand regular repayments. Rather, interest charged on the loan is added to the loan balance (capitalised) and the debt is repaid when the property is sold, the owner moves out, or their estate is divided up amongst their beneficiaries.

What loan features does Heartland Reverse Mortgages offer?

Heartland Reverse Mortgages has a commitment to providing custom-tailored options that fit the specific needs of seniors and retirees. Here are some of the features of its reverse mortgage product:

• Flexible drawdown option: Retirees can get their funds through a one-time lump sum payment; ongoing advances that can be set monthly, quarterly, or annually; and by having a 'cash reserve' facility for future access.

• Repay without penalty: While reverse mortgages do not require regular payments, borrowers can repay their loan if they wish to.

• Equity protection: Australian law protects reverse mortgage borrowers from negative equity, meaning they'll never have to repay more than the value of their home.

• Secondary property: Clients can use their investment property or holiday home as security for their reverse mortgage.

• Aged care option: This allows clients to still receive funding even if they no longer reside in their home and are already in residential care.

What drawdown options are available at Heartland Reverse Mortgages?

Heartland offers flexibility with its three drawdown options for its reverse mortgages.

1. Initial advance: In this option, clients are given a lump sum payment at the start of their loan. This may be ideal for those who want to have immediate access to a fund that they can use for renovation, purchase of a new car, or a vacation.

2. Regular advance: This option may suit those wanting to supplement to their income. Clients can set a regular payment to receive monthly, quarterly, or annually for up to 10 years.

3. Cash reserve: Borrowers can select a cash reserve for their funds and use the cash how they see fit in the future.

Whichever option is preferred, interest is only charged on amounts already drawn down.

How much can you borrow under a Heartland Bank reverse mortgage?

The amount you can borrow from Heartland Reverse Mortgages will depend mainly on your age upon applying and the value of your home.

A borrower aged 55 can borrow a maximum of 15% of their properties value, and that percentage increases by 1% for each year a person is over 55. Though, if the borrower lives in aged care, the minimum age they can access a Heartland reverse mortgage is 60 years.

Standard Heartland Reverse Mortgage

Age of youngest borrower	Maximum % of home's value able to be borrowed
55	15%
60	20%
65	25%
70	30%
75	35%
80	40%
85	45%
90	50%

If the security is an investment property or a holiday home, the maximum amount is reduced by 10%.

Who is eligible for a reverse mortgage at Heartland Bank?

Homeowners who are at least 55 years old can apply for a reverse mortgage at Heartland.

As for the residential property that will be used for the reverse mortgage, it must be of conventional construction, in good condition, and mortgage-free (or the outstanding mortgage must be repaid with the reverse mortgage facility).

Residential properties in retirement villages and certain post codes will not be considered.

FAQs about Heartland Bank reverse mortgages

How is interest calculated for Heartland's reverse mortgage?

Interest will be charged on your loan balance at current variable rates. This will allow you to make repayments without any penalties. Any rate changes will be communicated by Heartland.

Will you still own your home?

When you take out a reverse mortgage, you will still own and/or live in your home for as long as you wish.

Can you rent out your home?

It depends. If the reverse mortgage is taken out with an investment property as security or if you're residing in aged care, you can rent out the property as long as it satisfies the requirements set by the provider. However, renting out an owner-occupied property still needs further discussions and approval from Heartland.

How is the loan repaid?

You will not be required to make regular repayments when you take out a reverse mortgage. Instead, the total loan amount, including the interest and all fees, will be repaid once you sold the property, move into long-term care, or pass away.

Can I increase my loan amount?

Your age and the value of the property will determine the maximum amount you can borrow based on a certain percentage of your home's value. You may request to increase your loan amount but this would depend on the current property value, the total loan balance, and the age of the youngest borrower (if you are applying with someone else).

Can I refinance an existing reverse mortgage to Heartland Bank?

Yes, you can refinance an existing reverse mortgage to Heartland Bank if you meet all eligibility requirements.

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