Reverse Mortgage

A reverse mortgage is similar to a home loan but works in the exactly opposite direction. You avail a home loan from a bank to buy a house. You repay the home loan (Principal + Interest), in installments called EMI’s (Equated monthly installments), within a fixed time period (tenure of the home loan). In a reverse mortgage you borrow against the value of your home. You mortgage your house to the bank (pledge your home) and the bank makes payments to you as a lump sum, or in periodic installments (say once a month). You and your spouse continue to live in the house and on the death of the last survivor (you and your spouse), the loan (reverse mortgage) needs to be paid back to the bank with interest.

Why avail Reverse Mortgage?

Income

Senior citizens get income after retirement. Loan up to 60-90% of property value may be sanctioned.

Tenure

If you outlive the tenure of the loan, you continue to stay on the property. Ownership continues to remain with you.

No Tax

The amount you receive under reverse mortgage is a loan and not an income. You do not have to pay any tax on these amounts.

Emergency Money

Money can be used for medical and other emergency treatment. Useful as an income after retirement.


Eligibility criteria to avail Reverse Mortgage

  • Reverse Mortgage can only be availed if you are 60 years or older. If your spouse is a co-applicant (stands guarantee to the loan) she should be at least 58 years of age.
  • You need to be the owner of the residential property and reside/live on it.
  • Reverse Mortgage cannot be availed on a commercial property.
  • Your property needs to have a clear marketable title and should be free of any encumbrances.
  • Your property needs to have a residual life of at least 20 years.
  • You need a minimum CIBIL score of 700 for the final sanction of your reverse mortgage.


Key factors to consider for Reverse Mortgage

Documents required to avail a reverse mortgage

  • You have to fill up loan application form.
  • You need to be the owner of the residential property and reside/live on it.
  • You have to furnish the proof of ownership of the house.
  • You have to furnish details of your property, details of your legal heirs and so on