Archive for the ‘Mortgage’ Category
Reverse-mortgage can benefit seniors
A reverse mortgage which is also known as lifetime mortgage is a loan available only to senior citizens. In the year 2007 the finance minister of India introduced this scheme in India which is a well known concept in the West. “Reverse mortgage”, is the opposite of a normal housing loan and used to release the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves.
This scheme have some unique benefits such as, any house owner over 60 years of age is eligible for a reverse mortgage, the maximum amount of loan one can get is up to 60 per cent of the value of the residential property, The maximum period of property mortgage is 15 years with a bank or housing finance company, The borrower can opt for a monthly, quarterly, annual or lump sum payments at any point, as per his discretion, in this scheme The revaluation of the property has to be undertaken by the bank or HFC once every 5 years, 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 can be fixed or floating and hence will vary according to market conditions depending on the interest rate regime chosen by the borrower.
There are many benefits for the seniors in this plan that is why it is chosen by the senior citizens like the market reasons can changed interest rate level or the increased home appraised value, for instance. The situation of a senior may have changed. He can either need more loan or to decrease it by paying away a part of it. Or it can be one or some of the factors, which have influence on the loan amount, like changed age, because the older a senior is, the more he or she can get and If one of the couple dies, the other can still continue living in the house. So it is a great plan for every senior citizen.
What is mortgage insurance?
Mortgage insurance is a financial guarantee for the lender that helps to reduce or eliminate a loss in the case of a default by the borrower, and it is almost universally required on loans where there is less than twenty percent equity.
Mortgage insurance is basically a protection for the lender. When somebody plans to buy a home, and is unable to pay a huge amount as down payment which is 20% of the whole amount according to rule, it is the mortgage insurance that brings the lender to a safer side. Hence the buyer pays off the rest of the amount in Equated Monthly Installments (EMIs).
This type of specialized mortgage life insurance is of two types, Private Mortgage Insurance which generally, covers a substantial portion of the capital borrowed. Mortgage Insurance Premium protects the lender in the event of non-payment due to some unfortunate event.
Mortgage insurance may seem to be an unnecessary monthly cost to many first time home buyers, but it is in fact what allows most people to purchase their first home. With the law that allows homeowners to write this cost off their taxes, it has become a little more consumer friendly as well.
The mortgage insurance is a special type of insurance policy that is gaining huge popularity in the Indian mortgage industry. Some of the major mortgage financing industries in India include LIC Housing Finance, HDFC, ICICI Home Finance, SBI Housing Finance, UCO Bank, Allahabad Bank, United Bank of India, Kotak Mahindra Bank, Citi Bank, Standard Bank, HSBC
The Mortgage insurance eradicates all the worries of the lender. In other words, mortgage insurance spreads the risk between the lender and the insurance company. In this case both buyer and the lender come to the safer position because the buyer can give away the rest amount in the form of easy monthly installments and the risk of the lender is also covered.