Reverse mortgage loan options for seniors in India

Posted by KSK . June 18, 2019 -
Money Matters


Its your own house which gives you an opportunity to make up for shortfalls in retirement corpus and continue to live at the same place enjoying the hassle free retired life. Reverse mortgage loan is a concept which is now getting lot of attention from seniors residing in their own houses in india. Though Its very common among seniors residing abroad availing this type of loan which exempts them from paying back the loan emi, it is yet to catch up here in India.  Leading nationalised bank like SBI has been offering reverse mortgage loans for sometime now, but lack of promotions on their part has kept lot of seniors unaware of this option. This may not be the best of loan option, but it ensures that your house continues to be with you and allows you to reside while you raise the loan to attend to exigencies.

What is reverse mortgage loan: Its a loan which helps you to unlock the value of your Home to generate regular income or take care of exigencies during the retirement phase when you are no longer earning. This enables you to retain your house without selling & simultaneously raise a retirement corpus.

Reverse mortgage eligibility: A home owner above the age of 60 years can reverse mortgage a self occupied house and get a one time payment or regular income from the bank . In case of couple as co borrowers, the younger borrower cannot be less than 55 years to be eligible for loan. The property should have clear titles and free from any encumbrances, and the borrower should continue to reside after availing the loan.

Reverse mortgage amount : The lender bank offers 40-90% of the market value of the property as loan under this scheme with a upper cap of Rs. One crore. Loan tenure would be 10 years (for above 68 years)  and  15 years ( For 60-68 years) with Rate of interest  ranging from 12-13% depending on the lender & disbursement time prevalent rates. The borrower has options to take the loan amount lump sum in a single disbursement or take 50% of the loan amount upfront and balance in monthly or quarterly instalments. The entire loan amount received is  non taxable as it is not considered as a income and No repayment is required during the tenure of the loan. Pre closure of loan doesn’t attract any charges and will have to be done if the borrower discontinues to stay at the home and intends to relocate. On conclusion of the loan tenure or demise of the borrower, bank collects back amount lent by selling the property and give the balance to the borrower /legal heir. Borrower /legal heir has the option to pay back the loan amount to the bank post the conclusion of the tenure and retain the house.

For details on the Banks offering reverse mortgage or facilitators assisting with reverse mortgage disbursement you can send in your query to Kiran.ks@samsaraliving.com

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KSK June 18, 2019

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