The Senior Australians Equity Release Association of Lenders (SEQUAL) is set to release a joint paper with ASIC to help unravel misunderstandings around equity release products.
The corporate regulator and SEQUAL were in discussions to produce a publication to help retirees understand the implications of taking out an equity release product, SEQUAL executive director Kieren Dell said.
"We've been having discussions for quite some time and are now starting to talk about rough drafts," Dell said.
According to data from SEQUAL's latest report, around 80 per cent of over 60s recognised the term reverse mortgage, but only 40 per cent of those people picked the correct definition.
"It's about understanding how to use your equity in retirement and that's not just about reverse mortgages," Dell said.
The research found 28 per cent of seniors surveyed held the incorrect belief that a reverse mortgage involved selling a portion of a house to a bank in exchange for money or the loan involved compulsory repayments until the borrower passed away.
"They need to understand the questions they need to ask and the issues they need to be aware of," Dell said.
According to the research, 50 per cent of retirees said they only needed $300 a month extra for a comfortable retirement.
"If you look at the options already available, like downsizing to another home, just to fund $300 a month, what it indicates is that the lack of education means they are not necessarily looking at the right option," Dell said.
"Investors should be able to go to an adviser and ask what their options are."
