A reverse mortgage is a type of loan available to homeowners, typically aged 55 and older.

It allows them to convert a portion of their home’s equity into tax-free funds without the need to sell the property or make monthly mortgage payments.

The loan is repaid when the homeowner moves out or passes away.

To know whether you are eligible for a reverse mortgage, several factors are considered, such as your age, the property type (must be your primary residence), and the amount of equity in your home.

Consult with a lender or financial advisor to assess eligibility based on specific requirements.

The amount you can borrow with a reverse mortgage typically ranges from 20% to 60%² of your home’s value.

This percentage varies based on factors such as your age, property value, interest rates, and the specific terms of the reverse mortgage product.

Reverse mortgage loans are generally not considered taxable income, but they could impact eligibility for means-tested benefits.

It is advisable to consult a financial advisor or tax professional to understand the specific effects.

After you pass away, your estate or heirs can choose to repay the reverse mortgage and retain ownership.

Or they can sell the property and use the proceeds to repay the loan.

If your home’s value exceeds the loan balance, the remaining equity goes to your heirs.

Yes, you can sell your home if you have a reverse mortgage.

The sale proceeds can be used to repay the loan, including any accrued interest and fees.

If the sale price exceeds the loan balance, you or your estate will receive the remaining equity.

Consider…

It is important to coordinate the sale with the reverse mortgage lender to ensure a smooth process.

Yes, there are alternatives to a reverse mortgage for accessing home equity.

Options include…

• Personal loans
• Downsizing to a smaller home
• Using your savings and investments
• Asking your family for financial support
• Using your pension and annuities
• Other types of financial products such as retirement interest-only mortgages (RIOs)

It is essential to consider your specific needs and consult with a financial advisor to determine the best alternative for you.

The interest rate for a reverse mortgage is calculated based on various factors, including market conditions and the specific type of reverse mortgage product chosen.

It may be a fixed or variable rate, with variable rates capped for the duration of your loan.³

Knowing if a reverse mortgage is the right option for you requires careful consideration of your specific financial circumstances and goals.

Assessing your age, home equity, long-term plans, and financial needs are part of the discussions you need to have with your advisor before pursuing a reverse mortgage.

No, you will not lose your home if you take out a reverse mortgage as long as you meet the loan obligations.

As the borrower, you retain ownership of the home and can live in it for as long as you fulfil the loan requirements, such as maintaining the property and paying property taxes and insurance.⁴

Yes, it is possible to repay a reverse mortgage early.

By repaying the loan balance, including any accrued interest and fees, you can terminate the reverse mortgage.

This can be done through various means, such as selling the home, refinancing with a traditional mortgage, or using personal funds.

Beware however that this may incur early repayment fees that could outweigh the benefits of repaying the mortgage early.

A reverse mortgage can potentially affect your inheritance.

When you pass away, the loan and accrued interest and fees become due.

If your heirs wish to keep the home, they must repay the loan balance. If they choose not to repay, the lender will sell the property to settle the debt.

Any remaining equity after the loan is repaid goes to your heirs.

Yes, it is possible for two people to be on a reverse mortgage provided they are joint homeowners.

Joint borrowers, such as spouses or partners, can apply for a reverse mortgage together, allowing both individuals to benefit from the loan proceeds.

In the event of the borrower’s passing, the surviving borrower can continue living in the home and receiving the benefits of the reverse mortgage.

A reverse mortgage calculator is a tool that helps individuals estimate the amount of equity they can release from their homes. It works by taking into account factors such as the property value, the current interest rates, the borrower’s age, and the loan-to-value ratio. By inputting these variables, the calculator generates an approximate amount that can be borrowed; however, it is important to note that the actual amount may vary based on factors such as the lender’s specific terms and conditions.

You can find reliable reverse mortgage calculators on various financial and equity release websites. These calculators are designed to provide users with an estimate of the equity they can release. It is recommended to use reputable sources such as financial institutions, government websites, and established equity release providers. By using a reliable calculator, you can gain a better understanding of the potential equity release options available to you. Remember to consult with a financial advisor or equity release specialist before making any final decisions.

To use a reverse mortgage calculator effectively, you will need to gather specific information. This typically includes your property value, your age, your outstanding mortgage balance (if applicable), and the value of any outstanding loans secured against your property. Additionally, you may need to provide details about your property type, such as whether it is a freehold or leasehold property. By inputting accurate and up-to-date information, you can receive a more accurate estimate of the potential equity release available to you.

Yes, a reverse mortgage calculator can assist you in estimating the amount of equity you can release from your property. By inputting relevant information about your property’s value and your personal details, the calculator can generate an estimate of the potential equity release available to you; however, it is important to remember that the calculator’s results are just an estimation and may not reflect the final amount you can release. For a more accurate assessment, it is advisable to consult with a professional equity release advisor who can consider additional factors and provide tailored advice.

Whilst reverse mortgage calculators can be useful tools, they do have limitations. These calculators provide estimates based on general assumptions and may not consider specific lender criteria or individual circumstances. Additionally, they may not account for all costs associated with equity release, such as arrangement fees or legal expenses. It is important to consult with a financial advisor or equity release specialist who can provide personalised advice and consider all the relevant factors to ensure you make an informed decision about equity release.