What type of mortgage allows for the lender to make payments to the borrower using built-up equity, repayable upon vacating the property?

The type of mortgage that allows the lender to make payments to the borrower using built-up equity is known as a Home Equity Conversion Mortgage (HECM). This is specifically designed for homeowners, typically aged 62 or older, to convert a portion of their home equity into cash. The borrower receives payments from the lender based on the equity built up in their property, and this amount becomes repayable upon vacating the property, selling it, or when the borrower passes away.

This arrangement provides financial support to those who may be cash-strapped in retirement while allowing them to stay in their homes. The other types of mortgages mentioned—conventional, fixed-rate, and adjustable-rate—do not function this way. Conventional mortgages typically require monthly payments made to the lender, while fixed-rate and adjustable-rate mortgages are standard loan structures that require borrowers to pay back the amount borrowed along with interest over a set term. None of these options provide payments to the borrower based on home equity in the manner that a HECM does.