B24 - Reverse Mortgage/Home Equity Release

Reverse mortgages and home equity release schemes are designed to provide older people who own their own home with access to some of the monetary value of their home.

Essentially, the home-owner enters into a mortgage arrangement where they are lent money based on the idea that the lender will be repaid when the property is sold. Interest accrues against the loan.

The home-owner can receive their loan as a lump sum (all at once) or, more commonly, in regular modest payments.

Generally, there are no restrictions around how the loaned money should be used. Homeowners commonly used the money they borrow to upgrade their homes, to travel or to cover medical expenses. How much money you can borrow is calculated on the basis of your age and the market value of your home.

Pros

Cons

What do I need in order to take this option?

Could this option limit my future choices?

Yes, your ability to sell and buy another home in the future may be affected, particularly if the loan is substantial or the housing market has experienced a decline in values and your home's value has dropped as a result.

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