A reverse mortgage is a type of mortgage that builds up interest and is usually given to older people.

 

The bank gives homeowners who are 55 or older a lump sum of cash equal to up to 55% of the value of their home, less any current debt secured by the home. This amount earns interest until the homeowner dies or until the property is sold, at which point the mortgage is due and must be paid.

 

The main benefits are cash flow and repayment not needed until death.  The borrower never has to repay the debt until death or they sell the house.  

 

The main drawbacks is reduced equity to be passed into the estate or if they plan on selling the property during their lifetime.