A reverse mortgage is a loan that is made to senior homeowners that have equity in their homes. It can be a lump sum payment or a monthly income and there is no tax to pay. There are no monthly repayments to be made unlike a normal mortgage. This makes them ideal for people that are “equity rich but cash poor”, as is the case for many older people. Here are some of the benefits of a reverse morgage.
Stay in your home
This is an often-overlooked aspect of a reverse mortgage. Many older people do not want to ‘downsize’ to realize the equity in their home. They may have fond memories of the house they have lived in for years or they have friends and family close by that can help them.
A monthly payment from a reverse mortgage can supplement a small pension that a person has. Many people retire and have a lower pension income than they were expecting. Any payments that are made are generally tax-free.
As we get older we are much more likely to need some kind of healthcare. A reverse mortgage can help pay for this.
A home can be modified to help an older person be more comfortable. This could include installing a ramp or widening a hallway to allow for easy wheelchair access. A shower could also be installed downstairs.
A lump sum payment can be used for any purpose. This could include going on the holiday of a lifetime or visiting friends/relatives on the other side of the world. It could also be used as a cash reserve in case of emergency so giving peace of mind.
With all these benefits to a reverse morgage, is it any wonder that the number that are being taken out is increasing? If you think you may benefit from one, speak to a mortgage broker to get more information.