Mortgage Loans

How Does The Reverse Mortgage Work?

Reverse Mortgage

Today you will know and learn how a reverse mortgage works and what are the types of it, and that today they exist in most countries. The National Government recently launched the reverse mortgage mechanism. This model is aimed at people over 65 who are homeowners and want to have a supplementary income . To do this, people can mortgage their property in exchange for a monthly rent.

The Housing Minister, Jonathan Malagón, stressed that with the reverse mortgage applicants will be able to ensure their financial support during old age .

What is a reverse mortgage?

Reverse Mortgage

It is also known as a reversible mortgage or mortgage pension. It consists of a loan whose guarantee is a house that continues to be inhabited until the death of the owners , while they receive a monthly rent .

Once the owner dies, the heirs decide if they want to pay the credit with their resources and recover the property or sell the property and pay the corresponding percentage or deliver the property as payment for the rent received by their relative.

The first reverse mortgage in the world originated in the United States in 1961 , under the firm Deering Saving & Loan.

Types of income with the reverse mortgage

Reverse Mortgage

Something to highlight about the reverse mortgage is that it handles three types of income , depending on the needs of those who decide to use it:

 Life: consists of a monthly payment until the person dies.

Temporary: it is received from a monthly value for a certain number of years.

➤ Single income: in this case, the entire value is received in a single installment.

The value of the monthly amount will depend on several factors such as: the appraisal of the home, the age of the applicants for the product and the type of reverse mortgage selected.


María is 77 years old and her husband Martín is 60 years old. This couple has a $300 million home.

With the aim of accessing the reverse mortgage, María approaches the entity of her choice and makes the agreement under the life annuity modality. The entity’s adviser explains that, according to the appraisal of her home, her and her husband’s life expectancy, and other variables, she can receive a monthly rent of $900,000 .

This way, Maria and her husband will receive that monthly amount without having to move out of their house. Thus, housing becomes not only the space in which they fulfill their dreams, but also a mechanism to guarantee their financial support during old age.

I hope that this information has been of great help and satisfaction to you, so continue reading more articles published on this website so that you continue to learn much more about the different loan that you can see.

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