Mortgages are a very vast subject and assumed significance over the years due to the increase in dwelling needs of the people across the world. There are different types of mortgages are offered by lenders in different countries. Traditional mortgages require monthly repayment by the borrower. Each month the borrower repays a fixed amount of money to the lender towards principal and interest. Some lenders are offering interest only mortgage, under this, the borrower repays only the interest portion at the beginning and later on starts repaying the principal. Some of the borrowers are not satisfied with the traditional mortgages and they require something unique. They need some kind of cash without any monthly repayment. Understanding the pulse of the section of the borrowers, many lenders are offering reverse mortgages. Reverse mortgage allows a homeowner to plough the equity in his home to get cash. The borrower enjoys cash on the mortgage and is rid of any monthly repayments. The loan amount received on the reverse mortgage will depend on the age of the borrower and the value of the home. The borrower has no obligation to repay the loan as long as he continues to dwell in the house or as long as he survives.

A forward mortgage is a traditional mortgage, distinct from reverse mortgage. Forward mortgages require a monthly payment either towards both principal and interest, or only towards the interest. This way the forward mortgage is repaid at the end of the repayment period. Whereas, reverse mortgage works opposite to the forward mortgage. The lender advances money to the customer, for which he receives no payment. This means that the debt goes on increasing. Simultaneously the equity in home decreases. This is a rising debt and falling equity scenario. The amount of debt can never increase the value of the home. Thus, the mortgage provider, at the time of repayment, can only lay claim on the home. Reverse mortgage is only available to senior citizens i.e., people of 62 years or more of age. The home to be mortgaged must be owned by the borrower, either individually or as a joint holder. He must have lived in the home for the majority of the years and this must be the primary residence of the customers. Reverse mortgage is a good source of income for the elderly people. The borrower has to decide the manner in which the amount received through the reverse mortgage is to be disbursed. The government does not tax the amount received on the mortgage, and the borrower is free to use the money in the way he likes. Customers who want a regular income can draw a regular monthly payment. Some customers want a credit line opened in their name so that they can draw cash as and when they want. For others the availability of a lump-sum amount is more important, since they can apply it for purposes that are more constructive. Even a combination of these options may be used to draw the money on mortgage.

There is no limitation on the amount to be borrowed under reverse mortgages and this way it is distinct from the other mortgages. The mortgage is secured on the home of the borrower. This shields the lender against any defaults on the mortgage. Therefore, credit history of the borrower is not much of a problem.

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