Thinking about a reverse mortgage? Here’s why you should.

 Ah, retirement. The time when you can start scaling down and taking things easy. But, as we all know, its hard to take things easy if there isnt enough money to do it with. So how to supplement your retirement income? A reverse home loan, also known as a retirement home loan, is a loan that is designed for the exclusive benefit of senior homeowners, and can play a huge role in creating financial stability during your retirement.


Its based on what your home is worth

When you apply for a reverse home loan, a large part of the process will involve the calculation of your homes overall value. Your lender will make use of a reverse home loan calculator to assess you situation, based on information about your homes age, location, condition and more, as well as your own financial position as the homeowner.


A reverse mortgage calculator will also assist you in navigating government regulations and guidelines about this kind of loan. Because you are legally not permitted to take the full value of your house in the form of a loan, the calculation tool will resolve what percentage you may borrow.


Its a long relationship with your lender

The way a reverse mortgage works is its basically a home loan that doesnt have to be paid back on a monthly basis but instead youre getting paid by the lender in a reverse way, which is one of the most appealing aspect of it. The point is to supplement your finances during retirement, and putting you straight back into a debt trap would defeat the object of the exercise. The loan will remain valid for a long as you live in the home permanently and as your primary residence. If you choose to move out, the outstanding balance of the loan will be due.


How to access your loan funds

When you apply for the loan, you will also have to decide how you would like to receive the money. Your options are to take one large lump sum payment as a once-off, or as a line of credit, which means that you will be able to access the money as you need it, in flexible amounts. Yet another option is to take monthly payments, which is by far the most popular option, as it gives the receiver some form of predictability around their monthly budget.


How do I know if my property qualifies?

There are a few regulations that you will have to comply with when you apply for a reverse mortgage. Firstly, your property also has to be your permanent and primary home, which is to say that you cannot let out the property while having a reverse home loan on it. You will similarly not be able to bond a reverse home loan to a holiday property, or any property where you do not live permanently.


Please also bear in mind that your loan will also factor in aspects like whether or not you still have an existing balance on your current home loan, as that amount will be settled using your newly-granted reverse home loan, before you will be able to access the balance of the funds.



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