For older homeowners, a reverse mortgage is a great way to use equity in their home as a means of additional income in their retirement years. A reverse mortgage (RM) is a mortgage loan in which the owner borrows against their home equity. The lender provides monthly payments to the borrower.
Unlike a traditional mortgage, the owner does not repay the loan as long as he or she uses it as a principal residence. After the owner dies or no longer resides in it, the loan, plus interest, is repaid out of the equity. It applies only to those 62 years of age or older. In Singapore, reverse mortgages are now available to senior citizens owning flats.
Regulations provide that only a portion of the available equity, no more than 80 percent is eligible as collateral...Read More