We all know what mortgage is.
When you buy a house, you will usually take a housing loan from the bank. If the bank lends you $300,000 to buy a house, that will be the money you owe the bank. Throughout the years, you can decide how long you want to pay back the bank. Of course, it cannot be as long as 80 years. A typical home loan range from 10 years to 25 years. The shorter the loan, the higher the monthly installment you pay. The opposite is true too. The longer the loan, the lower the monthly installment.
That is mortgage. You pay monthly mortgage to the bank.
When you have finished the mortgage payment, you fully owned your house. The house is yours.
What about reverse mortgage?
Here’s a short video to explain to you:
You can watch the video on Youtube here too.
In short, reverse mortgage means you convert part of the equity of your home into cash from the lender, who is the bank. You can do this without selling your home or pay additional bills. There are a few countries who have supported this initiative, and it is usually started for the elderly who are 60 years old and above.
In Canada and US, reverse mortgage are quite popular as it is one way for the elderly to receive cash payments for their retirements. This initiative has given some opportunity for the elderly to ‘cash out’ their house, without selling them. The Singapore government is starting to look into this initiative, because of its increase in elderly population too.
You can read more about Reverse Mortgage on wikipedia too.
Is this reverse mortgage initiative to be supported? Will you support it?
Let us hear your views below.