How a Reverse Mortgage Can Fuel Your Retirement

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While retirement can bring freedom to life for the first time since childhood, it also spells the end of a regular income each month. The dilemma then is how to get the cash you need for that holiday you have always dreamed of, while at the same time balancing how to fund it without taking on mountains of debt.

The solution is actually more simple than you might think

Each aspect of reverse mortgages are actually more simple than they seem. When choosing your lender, bear in mind that there are only two kinds of institutions that offer this kind of mortgage – private lenders, and government agencies. While both offer pros and cons, government loans obviously have the additional layer of assurance that they are provided through and insured by federal government.


How much can you borrow?

Submitting a complete and full application is the key to getting approved for your loan, and for getting the best possible rate. During the application process, your lender will use a reverse loan calculator to establish how much it is possible for you to borrow.

This amount is calculated factoring in the current market value of your home, its age, location, and current condition. The loan value is then finalized and calculated based on the combined score of these categories, and the higher the score, the more the applicant can borrow and have access to.

How to spend your cash!

How you spend your cash proceeds from your reverse mortgage is your choice – this is the flexibility that a reverse mortgage offers! When considering how to spend your money, another benefit of a reverse mortgage is that you can either take it as a lump sum, as a monthly payment, or draw down on it as a credit line in the event of a medical emergency for example.

An additional layer of flexibility is offered by the fact that you can also amend your payment choice at any time. For example, you could begin your retirement with by receiving regular monthly payments from your reverse mortgage provider.

But if the opportunity came along to go on a dream holiday, to treat your children to a house deposit for their first home, or in the unfortunate event of a large medical bill to fund, then you simply contact your lender and ask either for a lump sum payment or for a credit line to draw down against.

All things considered, it is completely your choice how you access your money, and that is one of the greatest benefits of reverse mortgages.


How to start your application

The only criteria for applying for a reverse mortgage are that you need to be at least 62 years old, currently own your home (and can prove it), and that you can reliably cover other property costs such as tax, insurance and maintenance. Apart from that, the choice is yours! You can even start looking at options for reverse mortgages before you reach the age of 62, which makes it possible to start planning your retirement (and that dream holiday) long before your retirement actually kicks in.

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