Reverse mortgage offers senior citizens an additional income in order to be able to cover basic needs and medical expenses after retirement without being financially dependent on others.
• Great product for wealthy, cashless seniors
• The minimum age for borrowing is 60 years
• Repayment items in the event of the death of the owner or the sale of the property
• Loan-to-value ratio is approx. 60-80%
• The loan term is 10-15 years 10
• House maintenance remains the responsibility of the homeowner
• Property must be free from legal claims, liability and encumbrances
• Payments received are not treated as income and are tax-free
The start of Reverse mortgage in india was good news especially for those seniors who were wealthy but cash poor and had little additional income for basic necessities and other expenses.
Reverse mortgage is a financial product that enables homeowners to mortgage their property with financial institutions or banks and receive a one-off lump sum or monthly payments for a predefined period, depending on the value of the property.
Basic needs, rising living costs, and medical expenses pose a survival challenge for many seniors living on meager savings or a post-retirement pension. It is a bitter truth that spending becomes plentiful with age while income fades over time. Investment portfolios, health insurance, and other savings also offer limited post-retirement support. The basis of Reverse Mortgage as a solution is based on simple and inevitable realities that come with age.
The valuable four-factor option:
Reverse Mortgage is designed to pay an equal monthly installment to the homeowner willing to mortgage their property with a financial institution or bank that offers Reverse Mortgage as a product. In a few cases, homeowners can choose a lump sum or a line of credit in addition to monthly payments.
• Based on the current home valuation and the age of the homeowner, the financial institution creates a monthly installment model that is paid out to the homeowner and paid to the spouse in the event of the homeowner’s death.
• The second interesting and important factor is that the owners (owners and spouses) stay in the same house even after the product term of the bank’s payments to owners has expired. The bank cannot assert any claims until the spouses continue to occupy the premises.
• The third factor is that the financial institution gives the heir the first right to pay the mortgage amount with accrued interest and claim the property.
• The fourth factor ensures that the heir will be able to claim the amount received in excess of the mortgage amount after the sale of the house and claims as determined and communicated by the institution.
Reverse mortgage offers seniors a great way to stay in their own property, receive monthly expenses, and proudly carry on with their usual lifestyle. And the monthly claims remain for the surviving spouse, so that all needs are met even after the death of the main owner.
The first reverse mortgage product was launched by DHFL in India and is available from leading banks such as SBI, Bank of Baroda, Union Bank and Axis Bank, as well as Bajaj FinServ.