Reverse Mortgage Loan- Get a Helping Hand for your Retirement

A reverse mortgage loan is introduced by the National Housing Bank. It is a subsidiary of Reserve Bank of India (RBI) to assist the senior citizens to get easy finance for their living. It is a special type of loan specially designed for senior citizens. The borrower doesn’t require monthly mortgage payments but still has to pay other expenses like property Taxes and Home insurance premiums.

The loan can be repaid during the lifetime of the borrower or the ownership of the property will be transferred to the bank, which gave the reverse mortgage after the demise of the borrower. The reverse mortgage loan enables the borrowers to utilise the equity they receive from their home to secure their financial future for themselves. Generally, the borrowers have to make the payment after they move out, sell or transfer the property.

A reverse mortgage loan is convenient when you are suffering from the financial crisis and if you have no source of Income. But, you can use a reverse mortgage to avail a loan and the amount is disbursed in the form of the periodic payment. The borrower has a choice to choose a frequency of the periodic payment. A reverse mortgage is an ideal option for the borrower to get regular income.

Features of Reverse Mortgage Loan

Some of the important features of reverse mortgage loans are mentioned below:

1. Easy Cash

A reverse mortgage loan aids senior citizens to get easy access to cash. It enables them to become self-dependent and fulfil their needs. The cash received in the form of loan can be used for anything such as the settlement of old debts, medical conditions or any other personal needs.

2. Flexible Repayment

The borrowers can prepay the loan at any time when they want during their tenure without any prepayment charges or any penalties. It is a good way to secure your property without paying extra money.

3. No Mortgage Payment

People choose reverse mortgage loans as they want a good way to get a steady income. You don’t have to repay each month or at the time of tenure. The borrower doesn’t have to worry about the repayment of the loan as they can use as per their needs.

4. Retirement Savings

Most of the people don’t have enough savings for their retirement. But a reverse mortgage loan can help in retirement by providing them with extra financial support. Additionally, if the children are taking care of their elders they can avail reverse mortgage that will give them extra financial support.

Reverse Mortgage Loan Eligibility

The eligibility of the reverse mortgage loan are as follows:

• To avail reverse mortgage loan an individual should own a house in India and should have age above 60 years.
• The borrower must own the property. In the case of a couple, one of them must own property.
• If the loan is availed in the joint account, then one of the spouses must be above 60 years and the other spouse must be at least 55 years or above.
• The property must be a permanent resident of an individual and must be in existence for at least 20 years.

Other Features of Reverse Mortgage Loan

The lump-sum payment is permitted if the borrower or the spouse has to undergo any medical treatment. The maximum amount limit is Rs. 15 lakhs.

Under reverse mortgage loan, the borrower has to cover all the home insurance premiums-

Reverse Mortgage Loan Documents

The documents required for a reverse mortgage loan are as follows:

• Permanent Account Number (PAN)
• aadhaar card
• Title or Deed of the house that showcases the owner’s name
• Other documents like home insurance paper, Land use certificate etc
• List of legal heirs
• Additional documents required by the bank

Tax Benefits on Reverse Mortgage Loan

The borrower receiving the income from the bank will be tax-free At the end of the loan term, the repayment of the loan will not be considered as Deductible If the house is renewed or repaired with this money, then the amount spent on the renewal or renovation will be eligible for Deduction in the calculation of the income.