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Reverse Mortgages Have Advisers ConcernedIt doesn’t matter whether you live in the UK or the US, financial advisors are urging caution on the reverse mortgage option. A reverse mortgage is where an older individual can get money for their home in order to pay their bills, without having to make a mortgage payment. In a reverse mortgage, payment is due when the house is sold or the person can pay back the loan. The catch is many of the UK citizens who take part of this option are in their 60’s and above. They are retired and living off their pensions. While it looks like a great way to save their homes from being sold, when there is a sentimental value it could mean disaster. The house must be sold or the money returned at the time of the individual’s death or if they need to move into an assisted care facility. In other words the bank needs their money before the individual can be let out of the mortgage. If death occurs before payment is made then the mortgage falls on the heirs. They may end up selling it or paying the mortgage back with a high interest. There are several pitfalls to this reverse mortgage option. Another example would be trying to sell the home in the current market. If the mortgage was taken out two or three years ago chances are the value on the home was significantly higher than it is now. This means if the home value is lower than the cost of the reverse mortgage they have on the house, it may not be possible to come up with the entire payment for the loan payoff. There are other pitfalls of reverse mortgages which suggest you need to be extremely careful if this is an option you are electing to take. Back To Financial News June 2008 100 Percent Mortgages |
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