Unlike a conventional ‘forward’ mortgage where a borrower is required to make regular, scheduled repayments of principal and/or interest throughout the loan term, with a reverse mortgage the borrower is not required to make any repayments until the end of the loan.
This means that the lender may not get back any of the money they lend until many years later. As a result, their funding costs are higher than those of other lenders, and this additional cost is reflected in the interest rate that reverse mortgage customers pay.