In reverse mortgage, one has to pledge a property which he or she already own to the bank provided there is no existing loan outstanding against it The bank, in turn, gives you a series of cash-flows for a fixed tenure. Here is the list of advantages of reverse mortgage
1. Biggest advantage of it is that one will never owe more than the value of the home at the time of repayment of loan. In other words if bank has given you mortgage and if after 5 years prices of home declines sharply then bank won’t demand from you any extra amount.
2. Under it, one can retain the home ownership and also one can live in his or her home.
3. Money installments received under reverse mortgage will be tax-free.
4. There is no restriction on the way in which the installment amount is spent by the person who has taken it.
However before going for reverse mortgages it is better to look into factors which vary from individual to individual and then take decision whether to go for reverse mortgage or not.