It is a loan that allows you to convert your existing home ownership into cash flows, which you can use for meeting your living expenses. Unlike a mortgage, which is generally used to secure finances for the purchase of a property belonging to somebody else, the ‘reverse mortgage’ converts a self-owned property into finance.
A large number of elderly people in developed countries like USA use this product to fund their post- retirement living expenses. In a mortgage, they pay monthly installment in order to attain ownership of a house. The reverse mortgage is exactly the opposite, wherein a person sells the ownership of your home (to say a bank) and in exchange get a monthly income. Normally, the loan is paid off when the homeowner dies (or sells the property).
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