Reverse Mortgage: How It Works and Who It's For

Who's eligible

The primary borrower must be 60 or older (a joint-applicant spouse can be as young as 55), owning a residential, self-occupied property with a clear title free of existing loans or disputes, and the property must have a reasonable remaining usable life (commonly assessed at 20-25+ years by a bank valuer).

How the payout works

Rather than a single lump sum, the lender typically pays out in monthly, quarterly, or half-yearly instalments (a lump-sum option may also be available) - the amount depends on the property's assessed value and the borrower's age, with older borrowers eligible for a higher percentage of the property's value. Per NHB (National Housing Bank) guidelines, borrowers aged 60-65 can typically access up to around 40% of the property's value, rising through higher age brackets (roughly 50% for 66-70, 55% for 71-75, and higher again beyond 75).

No repayment during your lifetime

Unlike a regular loan, there's no monthly repayment obligation at all - interest simply accrues against the loan balance over time. Repayment (of the accumulated principal and interest) becomes due only when the last surviving borrower dies, permanently moves out (e.g., to long-term care), or the property is voluntarily sold.

What heirs need to know

Heirs typically have the option to repay the outstanding loan and retain the property, or let the lender recover the amount by selling it - any remaining value after the loan is settled goes to the heirs, not the lender.

(Eligibility ages, LTV bands, and mechanics checked as of September 2026, per current NHB reverse mortgage guidelines.)

The takeaway

A reverse mortgage suits a senior citizen who is asset-rich (owns a home) but income-constrained, and doesn't mind the home's eventual value going toward loan settlement rather than passing on entirely intact - a genuine trade-off, not a free source of income.