Reverse Mortgage – Some Interesting Facts You Should Know
If you are a senior citizen (aged 62 or more) and searching for a steady source of tax-free cash flow or income, a reverse mortgage may be a valuable option for you. You can borrow money by converting your home equity into cash and moreover, you don’t have to pay tax on the payments received from the lender as they are tax free in nature.
What is reverse mortgage?
A reverse mortgage is a popular form of mortgage loan available in the United States. This mortgage loan is offered to the senior and elderly homeowners (aged 62 and over) in that country. In the United Kingdom, a reverse mortgage is termed as lifetime mortgage.
A reverse mortgage loan is utilized for releasing the home equity of a property by way of a series of payments or one complete payment.
In case of a reverse mortgage, the liability of the homeowner for repaying the loan is postponed till the time of his/her death, the house is sold out or if that person shifts to another area (for example, going for aged care). A reverse mortgage is similar to an annuity where the interest and principal are paid with the equity of the homeowner.
Eligibility for reverse mortgages
If you want to avail a reverse mortgage loan, you need to satisfy the following requirements:
- You have to be a senior citizen (aged 62 or more)
- The house where you are living at the present time has to be a single family residence
- You have to stay in your home for the entire duration of the loan term
Advantages of reverse mortgages
You can get the following benefits by availing a reverse mortgage loan:
- You are able to enjoy the proprietorship of your residence throughout your life
- As long as you are living in your home, you don’t have to repay the loan
- There is no requirement of your credit history
- There is no requirement of minimum income
Lastly, it can be said if you are 62 or over and looking for a reliable source of tax-free income, a reverse mortgage might be the right option for you.
