How do reverse mortgage interest rates work?
As with all loans, interest is charged on the funds you receive from a reverse mortgage. Whether you receive regular drawdowns or a lump sum payment, interest is charged on the total amount drawn from your reverse mortgage.
Interest is calculated daily but only compounded (added to the loan balance) monthly.
Most loans require monthly minimum payments to repay the loan balance and associated interest charges; a reverse mortgage defers loan and interest repayment to when the loan matures.
However, in the case of a Household Loan, you can elect to make monthly interest repayments to avoid compound interest.