How Do I Receive Payments from Reverse Mortgage?

With a reverse mortgage, the “payment methods” aren’t about you making payments to the lender—unlike a traditional mortgage, you’re not on the hook for monthly bills. Instead, it’s about how the lender pays you, giving you access to your home’s equity. You get to pick how that money flows your way, and there are a few options to choose from. 

Here’s how it works:

• Lump Sum: 

  • You take the whole loan amount at once, in one big payout. It’s great if you’ve got a specific need—like paying off an existing mortgage or funding a big expense right away. It’s fixed, so you don’t get more later, and interest starts piling up on the full amount from day one.

• Monthly Payments: 

  • You can set up a steady stream of cash coming in each month. There are two options here:

• • • Tenure: 

      • You get a fixed amount every month for as long as you live in the home. It’s like a paycheck—predictable and lifelong, perfect if you want consistent income.

    • Term: 

      • You get a fixed amount for a set number of years (say, 5 or 10). It’s higher monthly payments than tenure, but it stops when the term’s up.ne of Credit: This is a flexible pool of money you can draw from whenever you want, up to your loan limit. Only what you take out accrues interest, and the unused portion actually grows over time (at the loan’s interest rate plus a little extra). It’s ideal if you want control—like dipping in for travel or emergencies as they pop up.

• Line of credit:

  • You can have access to the equity of your home through a line of credit. This creates the greatest flexibility and is a great way to tap into emergency funds at retirement. 

No matter which you pick, the money’s yours to use—travel, bills, whatever—while you stay responsible for property taxes, insurance, and upkeep. The loan balance grows over time with interest and gets settled when you sell the house or pass away. The method you choose just depends on how you want the cash to flow: all at once, spread out, or on-demand.

Reverse mortgages can be a useful financial tool for eligible seniors looking to supplement income, pay for healthcare, or cover living expenses, but they also come with complexities that should be thoroughly understood before proceeding.

Learn more about eligibility requirements for a reverse mortgage, situations where a reverse mortgage is best used, and common myths around reverse mortgage that we debunk with facts