29 C
Usa River
Monday, January 24, 2022

Know About Reverse Mortgage Loans in India and How Does it Work?

Must read

Difference between Watts and Amps

Amps Vs. Watts When it comes to the power consumption of certain appliances and lighting fixtures, you will often...

Build Your Personal Brand Using Professional Videos

Today the corporate world has grown tremendously over the past decades. People purchase from brands without fostering any personal connection with them....

Who uses 3PL?

Over 90% of the Fortune 500 companies in the US use 3PL. Most big companies shipping their products to countries worldwide rely...

How To Live Longer with Cancer

Cancer is hard, and there are no two ways about that. Its diagnosis and treatment can be draining and frightening than anything...
Basant Kumar
Basant Kumar, I am an Indian blogger. I specialize in all types of posts and I have been supporting on social media ever since days. If we want to make you successful and successful then social media is a very good and easy way whether you are in studies or business etc.

Surviving out of stable monthly income in old age is exceptionally challenging, especially when one doesn’t have children to support them or anyone else to take care of their expenses. With no liquidity in hands or money in your bank account, covering your expenditures, even the basics like food and clothing can be tremendously difficult.

Thanks to the Reverse mortgage loans, that the senior citizens can support themselves besides through pension. Introduced in the year 2007 in India, it is a scheme designed specifically for the old age population to prevent them from lingering in vain.

Understanding Reverse Mortgage

In Reverse Mortgage loans, rather than you paying the EMIs (as in a loan against the property), the lender provides you with money periodically (reverse EMI) after you have pledged your home. Following the death of the borrowers of the loan, there are two ways the lender can get their money back.

First, the legal heirs of the property can repay the entire sum and keep the house with them. Or, the lender can sell the property, keep the money equivalent to the loan amount and deposit the extra remaining lot to the legal heirs. 

How do Reverse Mortgage Works?

To understand the working of reverse mortgages, go through the points given below:

  • Generally, the owner of the house applies for the reverse mortgage by submitting the application form, other required documents and completing all other necessary formalities. 
  • For the application to get approved, the lender first verifies the condition of the property and if it is under the loan amount demanded. 
  • If everything goes well, the loan amount arrived is disbursed to the owner in the form of monthly instalments for a fixed tenure. 
  • The reverse mortgage loan interest is added to the loan balance. Generally, if the value of the loan balance exceeds the value of the house, the borrower is not asked to repay the excess amount. The lender bears the loss.
  • As the reverse EMIs proceed, the equity of the property decreases.
  • Even after availing the loan, you don’t have to worry about losing the house as the owner remains the same.

RBI’s Guidelines for Reverse Mortgage

The Reserve Bank of India has issued some guidelines regarding Reverse mortgages, which are as follows:

  • The maximum loan amount that a borrower can avail is 60% of the value of the property. 
  • The tenure ranges from a minimum of 10 years to a maximum of 15 years (even 20 in some cases).
  • The borrower can choose to get payments either monthly, quarterly, annually or as a lump-sum.
  • The borrower has to maintain the house for the entire period, and the lender will evaluate its condition every five years.
  • There will be no tax charged for the loan amount received.
  • The mortgage loan interest rates can be floating as well as fixed.

Conclusion

Reverse Mortgages are an excellent way to attain financial stability for house owners above 60 years of age. It is highly suited for elderlies who have no source of income at all and are facing problems with their pensions as well. By applying for a reverse mortgage, you can utilise your biggest asset- your house to financially support you till the end.

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

Latest article

Difference between Watts and Amps

Amps Vs. Watts When it comes to the power consumption of certain appliances and lighting fixtures, you will often...

Build Your Personal Brand Using Professional Videos

Today the corporate world has grown tremendously over the past decades. People purchase from brands without fostering any personal connection with them....

Who uses 3PL?

Over 90% of the Fortune 500 companies in the US use 3PL. Most big companies shipping their products to countries worldwide rely...

How To Live Longer with Cancer

Cancer is hard, and there are no two ways about that. Its diagnosis and treatment can be draining and frightening than anything...

How To Own Roof Repair Long Island For Free?

Roof Repair Long Island is one of those items that you can get for free in Long Island, New York, but it...