When is a reverse mortgage a good idea?

I have a family home which I've lived in for 15 years now. The majority of the mortgage has been paid (thank God) and I was thinking about the idea of reverse mortgages or equity release so I would be able to supplement my income. I'm wanted to know if anyone has any experience in reverse mortgages and if there's anything I should be aware of. Thanks!

If you have a property and you are looking to get additional income then it is worth considering a reverse mortgage. Many people ask when a reverse mortgage is a good idea and it really depends on your situation. If you have completely paid off your entire mortgage and you have no debts or obligation and you simply want to enjoy life then this is worth considering.

A reverse mortgage is also known as equity release. This is when the banks pay you to live in your own house and they take a proportion of it bit by bit. There are many types of equity release available and it all depends on your health and age. The way the payments are worked out is as follows, if you are seen to be old and have a lot of medical conditions then you will get a higher monthly payment. If you have just retired and are generally quite healthy then the payments will be lower.

You have to take a lot of factors into consideration before you take this route. You have to remember after a period of time or at death your home will belong to the bank and you will not be able to pass it on to your children. If you don’t really need to or want to pass on the inheritance then this kind of scheme may be for you.

If you really want to take this option then you need to find the best company that is willing to provide you with the most payment. Make a list of all the popular equity release or reverse mortgage companies and then call them one by one to get a bespoke quote from each of them. You might consider employing a financial adviser to do all the hard work and they can pick up a commission check from the other side. Make sure you use a independent financial adviser who has access the entire market as this will give you the best chance to secure the most money.

Once you pick the company you need to ensure that they are reputable and have enough capital to last a long time. In this financial climate many big financial institutes are failing and you need to do your due diligence before you pick the right organisation to release the equity. Many companies in the UK are regulated by the Financial Services Authority. It is better to get a slightly lower payment from a reputable company than a slightly higher payment from a company with no financial reputation.

Once you begin your equity release or reverse mortgage it is time to really enjoy yourself. The extra income you will receive for life can be used to pursue your dreams and ambition. You might even want to invest it if you want to if you can make your money grow significantly. Overall these types of schemes are a great idea if there is no need to pass on inheritance and you want to really enjoy your life at the latter stages. Remember with a little patience and perseverance you can generate a large income from one of your biggest asset – your homes