What is a Reverse Mortgage?
A reverse mortgage provides income that people can tap into for their retirement. It is a type of loan in which the owner of a home can borrow money against the value of his home without repayment of the mortgage (principal or interest) until the borrower dies or the home is sold.
The concept of reverse mortgage of houses originated in the US, where senior citizens who left uncared for by their children could use their home to avail money in their old age.
The advantage of a reverse mortgage is that the borrower's credit is not relevant, and is often unchecked, because the borrower does not need to make any payments. The home serves as collateral, and can be sold in order to repay the mortgage when the borrower dies (in some cases, the heirs have the option of repaying the mortgage without selling the home).
Features of Reverse Mortgage