Reverse Mortgage

A Reverse Mortgage is a loan which allows people 60 years of age and older to mortgage their home to realise cash equity from their property. The loan does not require repayments and allows interest and fees to capitalise to the principal balance over the life of the loan. This can be of great assistance to retirees who are often on a reduced income.

Depending on the borrower’s age, the maximum amount which can be borrowed will be between approximately 11% and 45% of the value of their home. The loan proceeds can be taken in a lump sum, as an annuity or used as a line of credit. The loan only becomes repayable when the borrower(s) either sell the residence, permanently vacate the property (e.g. move into a retirement living arrangement) or pass away. Reverse Mortgages can be very useful to retirees who are “asset rich but cash poor”. It can allow them access to cash funds without necessitating the sale of their home.