SWIMM managing director Tim Stoyles has urged retirees to receive informed advice as the increase in reverse mortgages being taken out continues to grow exponentially.

"It is a real growth market and the figures we’ve seen show it is growing at 50 per cent per annum compared with previous years," Mr Stoyles said.

"At the moment, the reverse mortgage market is around $1 billion-$1.5 billion, but more growth is expected, with projections of up to $15 billion in the next five years."

The growth stemmed from baby boomers struggling to retire and live off the superannuation they had, according to Mr Stoyles.

"A lot of older people don’t have access to any income stream and are struggling to pay bills, with the standard government pension not enough. About four million baby boomers are nearing retirement age and compulsory superannuation at current contributions has only been around in the past 10 years or so.”

Financial planning enterprise Sydney Wyde Investments and Mortgage Management (SWIMM) has gone against the industry grain and founded a reverse-mortgage consultancy to provide a range of alternative options, as well as informed advice for seniors.

 ‘‘We’re trying to show that reverse mortgages are not a bad thing as long as they are used responsibly,’’ he explained.

"The most important rule is not to take out a lump-sum loan against the house. You are using compound interest in reverse.

"The compound interest debt eats away at the equity of the house.

"A reverse mortgage is a great option provided it is taken out as an income stream. My advice is to take it as an income stream because compound interest only starts at whatever you draw out."

Mr Stoyles added it was imperative to receive financial advice from a professional.

"The statistics I have seen show that 40 to 50 per cent of reverse mortgages are sold by mortgage brokers," he said.

"The danger with this is that because brokers are paid trail commission on the debt, it is to their advantage to have a higher debt load when selling it.

"There is a bit of industry concern that it is being sold inappropriately as a lump sum for higher trail commission to inappropriate parties. We advise clients if there are any other alternatives and if not, how they can appropriately use reverse mortgages for their circumstances. For more information on reverse mortgage products and alternatives log onto www.swimm.com.au.