Legal Definitions - reverse annuity mortgage

A reverse annuity mortgage is a type of mortgage where the lender provides regular income to the borrower, usually an elderly person, over a long period. The loan is repaid in a lump sum when the borrower dies or when the property is sold. This type of mortgage is also known as a reverse mortgage.

For example, an elderly person who owns a house but needs additional income can take out a reverse annuity mortgage. The lender will provide regular payments to the borrower, which can be used to supplement their retirement income. When the borrower dies or sells the property, the loan is repaid in a lump sum from the proceeds of the sale.

This type of mortgage is useful for elderly people who need additional income but do not want to sell their property. It allows them to stay in their home while receiving regular payments from the lender.