Reverse Mortgage is the exact opposite of a Home Loan.
- Reverse Mortgage is available to Senior Citizens only. Any house owner over 60 years of age is eligible for a reverse mortgage. If wife is a co-applicant, she should be above 58.
Important Points in Reverse Mortgage
- This can easily act as Monthly income.
- At the end of the loan tenure, the Bank stops paying the monthly income.
- If one of the spouses dies, the other can still continue living in the house.
- If both die, the bank gives their heirs two options – settle the overall outstanding loan and retain the house or, the bank will sell the house, use the proceeds to settle the outstanding loan and give the rest to the heirs.
- The maximum loan is up to 60 per cent of the value of the residential property subject to maximum of Rs 50 Lacs.
- One can prepay the loan along with the interest any time during the loan tenure. Typically, there is no pre-payment penalty.
- The amount received through reverse mortgage is considered as loan and not income; hence the same will not attract any tax liability.
- Reverse mortgage rates will vary according to market conditions depending on the whether borrower has choosen Fixed or Floating interest rate.
- National Housing Bank (NHB)
- Dewan Housing Finance Limited (DHFL)
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- Indian Bank
- Central Bank of India
- LlC Housing Finance
- Andhra Bank
- Corporation Bank
- Canara Bank.
When to consider taking Reverse Mortgage ?
- Old couples with no legal heirs, no regular income.
- Couples whose children doesn’t support them financially.
- To be financially independent during later stage of life.
Though its not very popular mean of “Retirement Planning” in India, but in coming decade it will be popular as Nuclear family culture is growing at rapid rate.