An advantage of this type of loan is that you could have absolutely no income and still qualify for it. When applying for any loan it is important to make a good search so as to check out different options that you can choose from. There are various lenders out there and they will all have varying rates.
These loan schemes help a senior citizen who has ownership of a property, but at the same time does not have a regular source of income. He can basically put a mortgage on the property, with a bank or a housing finance company. Then, the bank or loan issuer will start paying the person a regular payment. In such a way he can have a regular income on which to rely.
The main advantage of this scheme is that the person can still reside in this particular property and continue to receive the much needed regular payments. So, basically the property now pays for the owner.
The downfall of these types of loans is that the bank will have the right to sell off the property in case the person against which the loan was issued passes away or decides to leave the place. It will then pass on any extra amount to the legal heirs of the borrower.
In order to make use of this type of loan system one has to be over a designated age, usually 60 years in most countries. Senior citizen borrowers who have relatively good credit should make sure to take the time to carefully evaluate whether a more traditional loan, such as a home equity loan, could be more beneficial in their case before opting for a reverse mortgage loan.