Depending on the product, you may be able to receive a lump sum, regular payments, a line of credit or a combination. Drawing money gradually can reduce interest compared with taking the full amount upfront. Availability and fees vary by lender.
Question
Can I take the money as a lump sum, regular payments or a line of credit?
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Short answer
The detail
Depending on the product, you may be able to receive a lump sum, regular payments, a line of credit or a combination. Drawing money gradually can reduce interest compared with taking the full amount upfront. Availability and fees vary by lender.
A reverse mortgage is secured against your home.
Depending on the lender and your eligibility, you may receive the money as:
- a lump sum
- regular payments
- a line of credit that you draw from when required
- a combination of these options.
You generally stay in the home without making regular loan repayments. Interest and any capitalised fees are added to the outstanding balance.
The loan is usually repaid when:
- you sell the property
- you permanently move out
- the last borrower dies and the deceased estate sells the property
- another repayment event specified in the contract occurs.
You may be able to make voluntary repayments before then. Some products may also allow you to protect a nominated portion of your equity, although the availability and terms of this feature vary.
Read more: Are Reverse Mortgages a Scam? We ask Reddit users.
Real stories where this came up
Positive outcome
"We Didn't Want Mum to Move." A Reverse Mortgage Helped Her Stay Where She Belonged.
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Mixed outcomealso negativealso positive
"We Thought Mum Would Have to Sell." Instead, a Reverse Mortgage Bought Her More Time.
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Negative outcome
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Related questions
Sources
Useful tool: try our projection calculator with your own example figures.
Verified by the Reverse Loans editorial team.
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