Facts to know before taking out a reverse mortgage

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If you’ve grown accustomed to a certain level of lifestyle during your earning years, you will likely find it hard to adapt to a lower budget lifestyle after retirement. Although many people turn to mortgaging their home upon retirement, this is not the recommended way to free up extra cash, as it puts you into a spiral of debt, which is the last thing you need after retirement!


As soon as you are 62 years of age, you can apply for a reverse home loan. You will be subject to retaining ownership of your house, and you will have to live in it permanently for the loan to be considered valid. 

How do you get your money? 

You can set up your reverse mortgage to receive monthly payments directly from your lender, or you could access it like a line of credit, or have it paid out as a lump sum. Many people opt for regular monthly payments, as these are useful for covering monthly commitments. They are also predictable, and act much in the same way that a salary would have, while you were working. Your lender will be able to advise you on what the best option is to choose, depending on your circumstances.

How much can I borrow? 

A reverse mortgage calculator is a useful tool that lenders use to help people assess their financial situation before taking out a reverse home loan. Because you are prevented by law from borrowing the full value of your house, this calculator will help your lender to evaluate your home’s value and condition, along with other factors that contribute to the final decision, regarding what percentage of the house you are allowed to borrow in the form of a reverse home loan. Bear in mind that there are laws that regulate the final amount that is granted to you.


if you have an existing mortgage, you are not prevented from applying for a reverse mortgage, but you will need to settle the initial amount first, before you can have access to the balance of your funds. As soon as that is out of the way, you are free to use the remaining money to spend as you prefer, while enjoying a retirement that is free of the pressure of monthly repayments. 

What’s the catch? 

Don’t forget the fine print! You will need to adhere to certain predetermined points, in order for your loan to be considered legally valid. You will not be able to leave your house for long periods of time, as part of the condition states that you have to live in the house permanently in order to keep your loan active. The bad news is that six months in Spain is off the menu. The good news is that a shorter time spent in Spain is still doable.


If you are clever about managing your residence in the house, while retaining your full ownership of it, you can look forward to a long happy time of financial flexibility, as long as you stay within the parameters of the initial agreement.

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