These types of loans are beneficial to older homeowners who can access the equity in their property by receiving funds upfront and/or monthly and often do not require monthly payments to be made by the borrower. These types of loans require payment of the balance due when the homeowner no longer utilizes the property as their principal residence.

The amortization schedule for these types of loans is opposite to what a traditional loan looks like as instead of the balance due decreasing as time goes on, it increases as more monthly funds are provided to the borrower.