Traditionally, home equity can be "extracted" in a number of ways: cash-out refinances, HELOCs, or Home Equity Loans. All of these allow you to either directly or indirectly utilize the equity built up on a home. However, all of these mechanisms require a homeowner to be in good standing with their lender and, typically, have decent credit.

As a thought experiment, I wondered if there were any tools a homeowner could use if they could no longer make their mortgage payments, but had a substantial amount of equity. I'm picturing something like a "reverse-mortgage" - where the lender simply increases your mortgage amount in lieu of payments (up to a "safe" margin, like 80% of the home value - at which point they'd move to normal foreclosure procedures). Does this exist or are there any financial mechanisms like it?

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    Country would matter, different countries have different rules. But in general I'd assume that if you can't make the payments the bank would want to foreclose ASAP to mitigate the losses.
    – littleadv
    Commented Feb 23, 2022 at 0:18
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    Increasing the mortgage balance does not satisfy your request to pay the mortgage.
    – RonJohn
    Commented Feb 23, 2022 at 2:37
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    This would only make sense if the bank would acknowledge the inability to pay as a short term problem. If they do tehen "forbearance" seems to be pretty close to what you describe: en.wikipedia.org/wiki/Forbearance
    – piet.t
    Commented Feb 23, 2022 at 7:30

1 Answer 1


Here in the UK, "equity release" schemes are being widely advertised. Most of them are essentially a mortgage that you never make any payments on. Provided the equity in your home is large enough, you could take out one of them, using a part of that money to pay off the existing mortgage. Paying off all existing mortgages would be a requirement of the equity release deal.

Such schemes are normally only open to over 55's. Since you never make a payment, the loan keeps increasing, up to a maximum of the entire value of the house. The loan must be repaid on your death, or if you ever sell the home.

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    In the US it is called "reverse mortgage" and is frequently used in scams/elder abuse cases.
    – littleadv
    Commented Feb 23, 2022 at 20:23

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