Reverse Mortgage
A reverse mortgage is a loan reserved for seniors over the age of 62 allowing them to defer payment of the loan until the owner either dies, the home is sold, or the owner moves.
What happens in a reverse mortgage is the homeowner defers payment until some definitive measure of the homeowners occupation is broken (usually through death, or being placed into aged care). Although no payments are being made, interest is being added to the lien on the property. In the case that the homeowner is receiving monthly payments, the debt on the property increases from month to month.
Because money received from reverse mortgage is not income, it is tax free* and will not affect your social security or Medicare benefits. This is a desirable option for seniors who are looking to use the money for home improvements, pay off existing debts (i.e. health care expenses) or to enhance their retirement years. Reverse Mortgage can aid seniors who are in danger of losing their home to foreclosure, allowing them to remain in their home while collecting the accumulated equity their home has accrued giving them ultimate peace of mind. In the event the homeowner is placed in aged care, is relocating, or dies, the home can be sold and the family can keep any money they make above the amount that is owed on the home.
* consult with your tax advisor
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