A reverse mortgage is where you borrow against the equity in your home to pay the home off, or allow you some cash flow for retirement. It is important to note that mortgage companies only give these types of loans to people aged 62 and over. Reverse mortgages are meant for people who own their own home or pretty close to the end of their mortgage. Why should I get a loan against my home? There are several reasons to consider getting another mortgage such as the following:

1. Benefit of a reverse mortgage
A reverse mortgage essentially allows you access to cash flow when you need it and gives seniors tax breaks as the cash is generally tax free. Additional benefits include:

• It helps with home modifications
• It can allow you to pay off your existing mortgage
• The loan is only payable when you die, or sell your property

2. Downsides of a reverse mortgage
There are many downsides to this type of mortgage, but you need to weigh up the pros and cons. Some of the downsides of a reverse mortgage are the following:

• It may not be cost effective. If you just purchased a home, you likely have $0 equity.
• The fees are often very high
• The interest does not stop accumulating
• If you have to sell your house, you may suffer a huge loss depending on how much equity was in your home at the time of the loan.
• If you have children, they may not have any profit from your estate when you die
• If you find you have regretted your decision 3 years down the line, you may not have the funds to get out of the loan. If you don’t have the capital, you will be trapped in that loan until you sell the house or die.

4. Getting a reverse mortgage
The first step is to talk to your current mortgage provider. See if they can give you a good rate. If they can’t then you can search elsewhere. After discussing the options, you will sign up for the loan and have your cash within days.

The decision to get any loan is a difficult one, but with the help of friends, family and a mortgage broker you can explore this type of loan and see if it is the right choice for your and your family.