Reverse mortgages presently allow people of age 60 and above to borrow money against real estate assets - usually their home - and repayment is not required until they sell or vacate the property or they die. In the case of couples, the age of the youngest owner or resident of the property is taken into account to establish the maximum amount that will be offered.

The amount that can be borrowed and the features and conditions of the products vary from provider to provider., It is vital that the borrower/s understand the conditions of the loan. Generally independent legal advice must be obtained before the loan will be approved. In some cases product providers require independent financial advice to be sought as well. This can be both difficult and, when possible, expensive. A solicitor or an accountant should be able to sign the document required in relation to financial advice. All Certified Practising Accountants (i.e. members of CPA Australia) have guidelines regarding the provision of the necessary certification.

Fees and charges are usually added to the loan amount and interest calculated on the outstanding balance monthly and compounded. The effect of compound interest on the loan balance can be significant. Where a person borrows $30,000 gross (including application fee), assuming a fee of $10.00 is charged monthly and the loan interest rate is 8.5% fixed, at the end of 10 years the debt would have grown to approximately $71,860. Depending on the growth in the value of the property, this could significantly reduce any legacy to beneficiaries.

Most providers offer a "no negative equity guarantee" which means that in the event of the property selling at a price lower than the balance of the loan, neither the borrower/s nor their estate (if applicable) will be called upon to make up the difference. It is important to know and understand the default clauses on the loan because being in default can void the "no negative equity agreement". Some of the default clauses include not having paid the rates on the property or not having adequately maintained the property, among others.

A calculator on the consumer website www.moneysmart.gov.au listed above which has been established by the Australian Securities and Investment Commission (ASIC) shows how debt can build up and may affect how much of your home you still own as time goes by. The moneysmart reverse mortgage calculator shows the effect on the equity in your home based on decisions you may make about: How much you borrow, whether you take an initial lump sum, arrange regular payments or a combination of both, how long you borrow for, interest rates and various fees, changes in home values.

Proceeds of the loan may be received as a lump sum, as regular monthly payments or as a "line of credit" depending on the provider. Interest rates may be variable or fixed.

The National Information Centre on Retirement Investments Inc. (NICRI) has a free Equity Release/Reverse Mortgage Information Service. This independent service is designed to help consumers understand the various aspects and issues of equity release and reverse mortgage products. Information officers are available via a toll free telephone service, 1800 615 676, from Monday to Friday between 9am and 5pm (Eastern Standard/Summertime) to speak directly to consumers regarding their individual circumstances. NICRI also have, in addition to publications and information, a number of calculators, including a reverse mortgage calculator, on their other website, www.moneymap.nicri.org.au and www.reversemortgage.nicri.org.au

The moneysmart site also has tips on understanding equity release products (including reverse mortgages) and the questions to ask before you commit to one. In addition, ASIC has a free publication, Thinking of using the equity in your home?, which is available for download from the moneysmart website or can be requested by telephoning ASIC's Enquiry Line, tel. 1300 300 630.

For people on Government income support payments (pensions or allowances), there can be an effect on these payments if they were to proceed with a reverse mortgage. It is recommended checking with Centrelink's Financial Information Service (FIS) before proceeding. Appointments can be made by telephoning 13 23 00.

Reverse mortgages are available in South Australia from a number of financial providers. While not recommending or endorsing providers, a list can be obtained from NICRI.