REVERSE MORTGAGE LOAN

Take EMI from Bank on Your Property

What’s Reverse Mortgage Loan

Senior citizens can get money as EMI from banks in lieu of their clear title self occupied house.

This is beneficial for senior citizens owning a house but finding it difficult to support their living standard Or medical emergencies.

One can mortgage portion of house equity to banks and earn fixed monthly/quarterly/yearly income from Bank.

History

Reverse mortgage loan is a popular concept in west and introduced in India in 2008. Although the concepts of reverse mortgage loan are appealing but with

cultural and implementation loopholes, it is not popular in India. Not many prospective customers are aware of it.

Banks too have failed to advertise this product and mostly it is left to public sector banks to endorse it.

Reverse Mortgage Eligibility

1). Age : A homeowner above 60 years of age is eligible for reverse mortgage loan. When applying with co-applicant, Only one of the applicant needs to be above 60 years. Some Banks may also consider 55 years of age.

2). Clear title Property

The property should have clear title and free from any encumbrances.

3). Amount Eligibility Applicant will get more money from money based on his seniority in age and value of the house. Factors effecting your eligibility are Applicant’s age, value of property, current interest rates & specific bank Or plan chosen.

Reverse Mortgage Tenure

The maximum loan tenure is 15 years. The period of residual life of the property should be at least 20 years.

No repayment is required till the End of Loan tenure Or demise of borrower/s. The periodic payout is generally for 15-20 years. Borrower Or legal heirs can free the property by repaying the loan Or selling the house. From the sale of the house, the bank keeps its loan share and rest goes to legal heirs.

PERIODIC VALUATION

Do ask the bank about its policy of periodic revaluation of property.

This is important as your payout from bank depends on it. Property prices change very frequently and one should insist

for regular and frequent valuation of your property.

TAX BENEFITS

As this is a loan and Not income. Payout from reverse mortgage loan are exempt from Tax cuts.

The lump sum amount or periodic payouts(monthly, quarterly, yearly) does not attract income tax and Capital gain Tax.

Summary - Reverse Mortgage Loan

1). Ask the Bank about their frequency of property valuation in this product.

2). Tax Benefits with Reverse Mortgage Loan.

3). Credit worthiness of Property is checked.

4). Loan Tenure of 15-20 Years.

5). Reverse Mortgage is a Fixed interest discounted product in reverse.

6). As the owner you will be required to pay real estate taxes, society charges and other house bills.