If you take out a reverse mortgage, one of the major advantages
is that you can choose how you would like to receive the money
that you release from your home.
Some clients like to know that they will be receiving a fixed
income for a set term whilst others will like to take a more proactive
stance in managing their money and want a lump sum. Others might
know that they are likely to need a certain amount over a period
of time, but are not so sure exactly when they need it.
Fortunately, with a reverse mortgage, there are payment plans
to suit everyone.
The Tenure Plan:
Here the borrower receives equal and regular monthly payments
from the reverse mortgage lenders for as long as they live and
remain in the property.
The Term Plan:
Here, similar to the Tenure plan, the borrower will receive equal
and regular monthly payments from the reverse mortgage provider
with the exception that the payments are made for a certain length
of time, or term. The term of the plan is decided by the borrower
and agreed by the lender. What's important to remember is that
repayment isn't necessarily due when the term is over. Repayment
is due when the borrower dies or ceases to live in the property
Line of Credit Plan:
The line of credit is without doubt the most popular reverse mortgage
plan. Here, instead of a monthly payment, the borrower decides
as and when they need the money, instructing the reverse mortgage
lender to issue an installment. Payments are unscheduled and it
works in a 'line of credit' where there is a pre-determined maximum
claim amount which the borrower can dip into when they want.
Modified Tenure Plan:
The modified tenure plan is a 'combination' plan. Like the tenure
plan, the borrower will receive regular monthly payments for the
rest of their life or residency. On top of this, the borrower
can request money as and when they need it, up to their line of
Modified Term Plan:
Another 'combination' plan, the modified term plan combines the
Line of Credit Plan with the Term Plan. Here the borrower will
receive regular monthly payments for a fixed term (decided by
the borrower) but retains the ability to draw more money from
the lender, up to their line of credit, as and when they want.