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.