the Shape of Money logo about us newsletter contact us site map search legal
Home #

Reverse Annuity Mortgages


While it is an excellent concept, there are a large number of hooks you should be aware of before you begin talking to a representative of a company offering these products.

In the first instance, please always seek independent advice from both your financial adviser (who may make commission on the transaction) and your lawyer.

The following are examples of the more obvious issues you should be aware of:

  • It is not the panacea for a lack of cash that you might have hoped for. In fact, you will be surprised at how little cash you can actually extract under these arrangements.
  • Some options require the loan to be repaid when it reaches a certain level. Avoid this option, unless you want to be forced into selling up and flat hunting when you are 83 years old.
  • In most instances, the loan is generally repaid when the house is sold. It is probably wise to only consider these options when you know your next home will be either permanent care, or with the angels.
  • There can be a number of initial and on-going fees, such as valuation fees, which need to be understood.
  • The concept is sold on rising property prices and low interest rates. When the reverse occurs, the value of your equity is rapidly reduced. This would limit your ability to obtain further funding and, of course, will reduce any intended inheritance.