What is a Reverse Mortgage?

A Reverse Mortgage or Equity Release loan enables people over 60 who live in their own home, access to the equity held in their home. A portion of the equity in the property is converted into income for you to use in your retirement as you please. This type of loan is secured against your home or investment property and can provide you with the financial independence you may not have otherwise experienced.

You may choose to use your funds to supplement your income, renovate your home, travel, pay for medical expenses, buy a new car, assist your family financially or invest – the choice is yours!

No regular repayments are required. You simply repay the loan when you sell, move out or pass away and you can repay the loan at any time.

Interest and any fees are “rolled up” in the balance and you can stay in your home for as long as you like – there is no loan term.

Most lenders will require that at least one of the borrowers live in the home. If the security property is a residential investment property then the Borrower(s) must own and occupy their own home.

Reverse Mortgages are very flexible allowing you to choose a lump sum, regular repayments or a combination of both. You can also choose to protect up to 20% of the equity for your beneficiaries no matter what the final loan balance is or value of your property.

The graphs below illustrate two scenarios on how a Reverse Mortgage works. The first graph assumes a lump sum is taken and the second a regular payment plan.

“Reverselink” will prepare a similar graph for you taking into consideration your own circumstances.