Retiring with a mortgage in Australia: older home owners and retirement income

In 2019–20, 971,500 owner-occupier households aged 55 and over carried a mortgage, including 225,700 where the reference person was 65 or older. This shows that mortgage debt is no longer limited to working-age households and remains part of later life for a significant number of older Australians.

Outright ownership remains the most common arrangement in later life, and most older Australians reach retirement without a mortgage. However, national home ownership rates have declined over time. Home ownership fell from 70% of all households in 2006 to 66.0% in 2021. Of that 66.0%, 35% owned with a mortgage and 31% owned outright.

This shift matters because mortgage debt is lasting longer for some older households. Buyers entering the market later can carry home loan debt further into older age, changing the mortgage profile of pre-retirement and retirement-age households.

Close to 9.8 million households were counted nationally in the 2021 Census. That dataset captures tenure patterns but not housing costs, which is why the age-by-cost comparisons in this article are drawn from the ABS Survey of Income and Housing 2019–20.

Home ownership among 50–54-year-olds fell from 80% in 1996 to 72% in 2021, a drop of eight percentage points over 25 years. This means households approaching retirement are entering their later working years with lower ownership rates than earlier generations. Those who buy later may also carry mortgage debt further into later life.

The national picture shows a similar shift. The share of all Australian households owning with a mortgage rose from 32.1% in 1999–00 to 36.8% in 2019–20, while the share owning outright fell from 38.6% to 29.5% over the same period. This shows that outright ownership has declined across the wider population, while mortgaged ownership has become more common.

Later home purchase can extend mortgage debt into older age. A borrower entering the market at 38 rather than 28 with a 25- or 30-year loan term may not clear that loan until their mid-to-late 60s. This example does not claim an average mortgage payoff age, but shows why later entry into home ownership can shift mortgage debt closer to retirement.

Together, lower ownership rates among people approaching retirement and the higher share of mortgaged ownership across all households help explain why more Australians are carrying home loan debt into older age.

Housing-cost pressure was highest among lower-income households aged 55–64, with 25% spending more than 30% of their gross income on housing costs in 2019–20. That proportion fell to 13% at ages 65–74 and rose slightly to 9% at ages 75 and over. These figures cover lower-income households across tenure types and show how housing-cost pressure changes across older age groups.

The all-tenure averages of $263, $99 and $73 per week for the three age bands do not show the full cost difference for households still carrying a mortgage. Those averages are weighted toward households that own outright and have lower weekly housing costs.

For mortgaged households, the cost gap was $344 per week at ages 55–64, based on $405 for mortgaged owners compared with $61 for outright owners. At ages 65 and over, the gap was $229 per week, based on $279 compared with $50. At ages 75 and over, it narrowed to $130 per week, based on $177 compared with $47.

The gap narrows with age, but it remains visible for older households that still have a mortgage.

Mean weekly housing costs for a mortgaged owner aged 65 and over were $279 in 2019–20, compared with $50 for an outright owner in the same age group. Using the maximum single Age Pension from 20 March 2026 as a current income benchmark, those housing costs were equivalent to roughly 46% of the weekly pension amount before other expenses. For an outright owner, the equivalent housing-cost share was around 8%.

The all-tenure average of $99 per week for households aged 65 and over does not show the position of households still carrying a mortgage. That figure blends the majority of households that own outright at lower cost with the smaller group still carrying mortgage debt. Mortgaged owners aged 65 and over had weekly housing costs around 2.8 times the all-tenure average.

Superannuation was the main income source for 23.1% of retired women in 2024–25, compared with 34.6% of retired men. This means retired women were less likely than retired men to report superannuation as their main income source. Where retirement income is lower or more reliant on government pension payments, ongoing mortgage-related housing costs can take up a larger share of income.

Australians born after 30 June 1964 can generally access superannuation from age 60, either as a lump sum or through a transition-to-retirement income stream while still working. Those born earlier have a preservation age between 55 and 59, depending on birth year.

Under the Home Equity Access Scheme (HEAS), combined pension and loan payments can reach up to 150% of the maximum pension rate. For a single person on the full Age Pension of $1,200.90 per fortnight, the maximum additional HEAS loan payment is $600.45 per fortnight. The interest rate on HEAS loans is 3.95% per year, compounded fortnightly.

The scheme is available to people of Age Pension age or older who own Australian real estate. It provides a voluntary, non-taxable loan secured against the property. Up to two lump-sum advances are allowed in any 26-fortnight period, with each advance capped at up to 50% of the maximum annual pension rate.

Private reverse mortgages are separate products offered by private lenders. ASIC's Moneysmart guidance states that a person aged 60 can typically borrow around 15 to 20% of their home's value, with the limit increasing by approximately one percentage point for each year over age 60.

Reverse mortgages taken out from 18 September 2012 include negative equity protection. This means the amount owed under the loan cannot exceed the value of the home.

No official source publishes a comprehensive national volume series for private reverse mortgages in Australia. The available official and regulator information focuses on scheme rules, borrowing limits and consumer protections, rather than the scale of private-market activity.

Since the downsizer contribution scheme began in 2018–19, 98,500 individuals have contributed $25.255 billion to superannuation from home sale proceeds. That equals an average contribution of approximately $256,400 per person.

In 2024–25, 15,800 individuals made downsizer contributions, with total contributions of $4.165 billion. The average contribution was approximately $263,600 per person. The 2024–25 figures are based on the latest ATO downsizer super contributions data and may be revised as reporting is finalised.

The scheme applies to people aged 55 and over and allows contributions of up to $300,000 per person, or $600,000 per couple, from the sale of an eligible home into superannuation outside the usual contribution caps.

Downsizer contribution data does not capture all downsizing activity. Not everyone who sells a larger home and moves to a smaller property makes a formal downsizer contribution to superannuation.