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| Reverse Mortgage |
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If you missed out on effective retirement planning, or reached a point where the corpus you created wasn’t sufficient to meet all old age expenses, this might be your answer.
Often in the senior years, when we need money for our daily needs or for a medical emergency, selling off property or other immovable assets is the only option at hand. In case where a senior couple has only one property in the form of the house they live in, selling it would mean, losing your own house.
With the introduction of reverse mortgage in India in 2007, this situation changed. In this case, the home is pledged with the bank and after assessing the market value, a loan is disbursed in the form of periodic payments, known as reverse EMIs.
Guidelines for reverse mortgage
The RBI has formulated the following guidelines for a reverse mortgage:
~ Max loan amount would be up to 60% of the value of the residential property
~ Max tenure permissible was 15 years. Now however it can be upto 20 years
~ Option of monthly, quarterly, annual or lumpsome amount
~ Property revaluation to be done by the lender bank once every 5 years
~ Atleast one of the owners should be above 60 yrs of age
Advantages of reverse mortgage
~ Amount received through reverse mortgage is a loan and not income, hence it does not attract tax.
~ The possession remains with the original owners until death of both, husband and wife
~ Under ordinary circumstances, after the death of both, bank takes possession and sells off the property to recover both the principal and interest. However, should the children want to take back the property, they may do so by paying off the principal loan plus the accrued interest till date.
To re-visit the merits and demerits of reverse mortgage in your case, please contact our team of experts. |
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