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A reverse mortgage is a specialized home loan that allows the home owner to exchange a bit of the equity in their house into hard cash. However unlike a conventional home equity loan or even a second mortgage, there are no repayments to make until the borrower stops using the home as their primary place of residence. Do you qualify for a reverse nortgage? In order to qualify for a reverse mortgage you must be at least 62 years old, living in the home that you own and with no outstanding mortgage, or in some cases with a small amount of mortgage remaining that can be settled with the monies received from the loan. What type of properties are considered eligible? Most types of property are eligible including, units, detached houses, town houses and various manufactured houses. How does a reverse mortgage differ from a second mortgage? With conventional second mortgages, you must make monthly repayments and therefore you will be expected to have adequate income to meet such terms, however a reverse mortgage differs in so much as it pays you the money and does not require you to have any income. Will the lender repossess my house if I live longer than the loan term? Absolutely not, you will not be required to repay any of the loan provided you continue to live in the home and that you continue to keep any current insurance and taxes on the home up to date. What about my estate, will I have anything to leave to my family? Should you sell your house or if you no longer continue to use it for your main residence, then your estate will pay back to your lender the money you acquired from the reverse mortgage, in addition to any other fees and interest. All of the remaining equity in your house, will become the property of your inheritors. How much can I expect to have from my house? This will depend upon your age, current interest rates, and an appraised assessment of your property, generally speaking the more expensive your house and the older you are, the more you can borrow. What are the methods of payment? You have a choice of options on how you would like to receive your money from a reverse mortgage, you might want to have it as a line of credit, or from one of the following options; 1. All at once in a lump sum, 2. Fixed monthly payments for a set period or for the duration of you stay in the house. Usually the most popular option chosen by more than 55 per cent of borrowers is to take the line of credit, which will allow them to withdraw money on the loan proceeds at any given time. As with everything else to do with your financial security, you should always exercise caution and seek as much information as you can from multiple sources.
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