When you start talking to people about mortgages, home loans and all the other financial things that we all use but most of us can’t bear to think about it can feel like you are talking to a zombie.
All too often any talk about finances brings on blank stares, one of the worst scenarios is when you have to talk to your parents about their financial situation. During the early part of your life it seemed like your dad knew everything and your mum could fix anything.
As you get older you go through stages where you think your parents are genius or else they are total know nothings, these feelings tend to evolve as you grow up and have kids of your own. Usually your parents haven’t changed at all but your outlook on the world has.
Suddenly life has moved on and your parents are old, grey hair has crept into their life and maybe ill health is becoming part of their day to day life as well. Most people get to retirement age and wonder where all their money went and how they are going to cope with all the bills during the next few years.
This is where a reverse compounding loan or reverse mortgage comes into play. The general idea is that anyone of retirement age can take out a loan which only has to be paid back after their death. So they get to enjoy the money now and the company or bank that make the loan get their money back after they are gone.
Of course there has to be some sort of guarantee that they will get the money (plus interest) so they use your home as collateral. As long as you have equity in your home and are over 62 you should not have many problems getting a reverse compounding loan.
For many people this seems like a perfect arrangement, you get the money that you need now and the company get their money later. Just be sure to deal with a reputable company and it is always a good idea to tell your children what you are doing so there are no surprises at a later stage.
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