Getting a reverse mortgage is like staying in a nice hotel
To help explain this financial solution better, you can think about getting a reverse mortgage like staying in a nice hotel or resort.
When you check into a hotel, you provide a credit card that is used as collateral (security that proves you will pay your bill). You get to enjoy your room, the swimming pool and other amenities, room service and meals in the hotel’s restaurant, and you don’t pay a cent until you leave.
With a reverse mortgage, your home is used as collateral, allowing you to access some of the equity in it. You get to use the money from the loan to improve your lifestyle, pay off debts, go on vacation or renovate your home. And the best part is, you don’t have to pay back a cent until you move out or sell your home.
In a hotel there are people who will happily do lots of things for you, from bringing you the morning paper, to cooking your breakfast and doing your dry cleaning. With a reverse mortgage, you’ll have the extra funds to pay for snow clearers, gardeners and house cleaners, as well as dinners out at your favourite restaurants.
In the same way that a credit card allows you to stay in a nice hotel suite rather than a tiny motel room, a reverse mortgage allows you to stay in your home rather than having to sell or downsize.