Reverse Bank Mortgage

A reverse mortgage (known as lifetime mortgage in the United Kingdom) is a loan available to seniors (62 and over in the United States), and is used to release the home equity in the property as one lump sum or multiple payments.The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (i.e. into aged care).

In a typical mortgage the homeowner makes a monthly amortized payment to the reverse mortgage lender; after each payment the equity increases within his or her property, and typically after 30 years the mortgage is paid in full and the property is released from the lender. In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, then the debt on the property increases each month.

If a property has increased in value after a reverse mortgage is taken out, it is possible to acquire a second (or third) reverse mortgage loan over the increased equity in the home. But in certain countries (including the United States), a reverse mortgage must be the first and only mortgage on the property. See the following article for more Reverse Mortgage Information: Reverse Bank Mortgage-Requirements