Reverse mortgages are usually only accessible by people who own their own home completely and want to borrow money against it based on the equity that they have in the home.

As in a regular mortgage the home is held as collateral for the loan with the difference being that repayments on the loan are not required and interest is applied to the loan.

So, instead of the loan steadily diminishing over time, the debt increases. If a disciplined repayment plan is not in place then at current interest rates a loan can double within ten years.

Reverse mortgages can help people maintain their standard of living, pay for home repairs, go on trips or purchase needed items without the worry of having to sell their homes and relocating to smaller places.

If borrowed simply for pleasure, the disadvantages of such a loan are numerous.

Since the debt increases over time, it can lower the value of your estate. You may not have enough money left to pay for a retirement home. Taking a reverse mortgage payment as a lump sum may affect your eligibility for Centrelink payments. The biggest disadvantage is that you will be once again be in debt after having worked so hard to pay it off to begin with.

However, one way to possibly make a reverse mortgage work for you is instead of spending the money on things that will not bring you any returns, place it wisely in secure vehicles that guarantee moderate returns on your investment.

In this manner you may be able to off-set the monthly interest charges and as your investment grows you should be able to pay down your debt and still have a tidy little nest egg left over.