All You Need To Know About Reverse Mortgage Loans

by Litty Jose Finance Analyst

Mortgage loans are the best way to get a loan to fulfil your needs. Mortgage loan schemes allow you to keep your property as collateral and get a loan against the price of the property for a decent tenure. Mortgage loan interest rates are generally lower than other types of loans, because the bank or NBFC has your property with them as guarantee. These are the best types of loans if you’re looking for a big loan for your business or any other sort of investment, education and so on.

What are reverse mortgage loans? These are a new scheme that the government has devised only recently. Reverse mortgage loans are designed for senior citizens to help them provide for their day to day needs after their retirement. In this scheme, a senior citizen can get a loan against the property that they currently reside in. The loan amount is based on the evaluation of the property and the mortgage loan interest rate is based on what is agreed upon by both the parties.

In a reverse mortgage loan, the loan amount is paid to the beneficiary in small monthly instalments, the highest you can get per month is 50,000 INR. You can also get a lump sum payment on your reverse mortgage loan, which is capped at the lower end of 50% of the total eligibility amount or 15 lacs INR.

Here’s everything you need to know about reverse mortgage loans.

Who can avail of this loan: As mentioned before this mortgage loan is designed for senior citizens. A senior is someone who is over the age of 60. A 60 year old, who has his own property can avail of a reverse mortgage loan, either individually or jointly along with his/her spouse.
What is the tenure of a reverse mortgage loan: The tenure of a reverse mortgage loan is generally 20 years.
What are the terms of repayment of this loan: If the senior citizen decides to discontinue this loan, they can do so easily. They can simply repay the outstanding amount of the loan to the bank and close their loan. If the individual dies, their spouse can still receive the payments from the loan for expenses. In case both die, the heirs can choose to repay their loan and reclaim their property from the bank. In case there are no heirs, the bank or NBF can simply sell their property.