A "low interest" loan shouldn't mean you have very little interest in paying it back!
  • What Is A Reverse Mortgage?

    Reverse mortgage is a home loan wherein the borrower will receive the loan amount in monthly instalments for a house he/she owns. This is the opposite of a home loan where the borrower would have to pay monthly instalments to the lender.

    Reverse Mortgage Loan Eligibility Criteria

    • A reverse mortgage is available to anybody over the age of 60. In case a couple wishes to opt for one, at least one of the participants should be over the age of 60 years. Many banks require the other spouse to be 55 and above, while some require him/her to be at least 58.
    • The borrower must have a fully owned house. In case of a couple, at least one of them must own a house. In some cases, banks take over the home loan and pay off the balance in monthly instalments to the borrower.
    • The property must have been in existence for at least 20 years.
    • The property must be the permanent residence of the individual.
    • The property must be self-acquired, which means the property cannot be inherited or a gift.
    • Properties that are let out or being used for commercial uses are not eligible.

    Documents Required To Avail Reverse Mortgage

    The documents required to avail a reverse mortgage are mentioned below.

    • Permanent account number (PAN)
    • Aadhaar card
    • Registered will
    • List of legal heirs
    • Property details

    Top 3 Tax Benifits On Reverse Mortgages

    1. The income the borrower receives from the bank will be tax free.
    2. In the event that the house is renewed or repaired with this money, the amount spent on the renewal or repair will be eligible for deduction in computation of income.
    3. The repayment of the loan at the end of the loan term will not be considered deductible.

    9 Points To Remember In Reverse Mortgage

    1. A reverse mortgage is available to citizens of India who are over the age of 60. In case of a couple looking for a reverse mortgage, at least one of the participants must be over the age of 60, while the other has to be over 55 or 58 years of age, depending on the bank.
    2. The maximum loan provided under this scheme is 60% of the property cost, up to a maximum of Rs.50 lakh.
    3. The minimum tenure of the loan is 10 years while the maximum tenure varies from bank to bank.
    4. The borrower can either opt for monthly, quarterly, yearly or lump sum payments.
    5. The property must be revaluated every 5 years by the bank or housing finance company.
    6. The income received from a reverse mortgage will be tax free as it is considered a loan.
    7. The rates on a reverse mortgage vary from bank to bank and the type of loan the borrower has opted for.
    8. The processing fee of a reverse mortgage varies from 0.15% - 1.50%, depending on the bank.
    9. A borrower can prepay the loan at any point during the term of the loan without attracting a prepayment fee, in most cases.

    List Of Banks That Offer Reverse Mortgage Scheme

    National Housing Bank (NHB) Punjab National Bank (PNB)
    Central Bank of India Indian Bank
    Andhra Bank Dewan Housing Finance Limited (DHFL)
    State Bank of India (SBI) LlC Housing Finance
    Corporation Bank Canara Bank

    Drawbacks Of A Reverse Mortgage Scheme

    • Lengthy documentation is usually required in order to avail a reverse mortgage.
    • The monthly amounts are fixed and there will be no provision to increase this amount.

    Reverse Mortgage Scheme For Senior Citizens

    Senior citizens looking for a stable source of income can benefit from a reverse mortgage. Not only do they receive a steady source of income, but their heirs would profit from this transaction in almost all cases as the property value is bound to rise overtime and outweigh the loan amount.

    What Is A Reverse Mortgage In Simple Terms [With Example ]

    Introduced to the nation in 2007, a reserve mortgage has been a blessing to many looking for a stable income in the current economy. Vaguely, a reverse mortgage is the opposite of a home loan. In a reverse mortgage, the borrower will receive the loan amount in monthly instalments for a house he/she owns, as opposed to a home loan where the borrower will have to pay off the loan in monthly instalments to the bank.

    So how does the bank profit from this transaction? This can be explained in the following example. Let’s say that Mr. and Mrs. Raghav fully own a house worth Rs.1 crore in the city of Bangalore and are looking for a stable source of income as their two children haven’t begun earning yet. Aged 60 and 65 respectively, the Raghavs then opt to go for a reverse mortgage. On consulting with a bank, the bank agrees to approve a reverse mortgage of Rs.75 lakh for 15 years, payable in sums of Rs.42,000 monthly.

    At 80, Mr. Raghav passes away of old age. However, his wife still lives in the house and his two children are old enough to financially support the family. A few years later, Mrs. Raghav too passes away at the age of 85. The tenure of the reverse mortgage has now surpassed the 15 years initially agreed upon and is now 20 years old. The loan has therefore grown and currently amounts to Rs.1 crore.

    At this point, the property is then transferred to their children. The children now have two choices on how to go about closing the loan. They can either pay off the loan of Rs.1 crore and keep the property or they could sell off the property that will now be worth Rs.2.5 crore, pay off the bank and keep the difference. In this case, if Raghav’s children sell the house for Rs.2.5 crore, they will have Rs.1.5 crore for themselves after paying off the mortgage of Rs.1 crore.

    In the event that the borrower of a mortgage loan doesn’t have a legal heir, the bank will simply take possession of the house, sell it off and make a profit out of it.

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    Reverse Mortgage Reviews

    • LIC Housing Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      I am using the home loan with the LIC HOUSING FINANCE since from last 2 years the loan amount given was satisfactory also the documentation process was simple and easy to get the loan with this bank. the rate of interest was nominal which is satisfactory in this loan.
      Was this review helpful? 1
      , hyderabad
      Reviewed on May 19, 2019
    • United Bank Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      The documentation process was simple and easy to get the home loan with the UNITED BANK OF INDIA. The loan amount was good and the rate of interest was 10% which was fixed and now changed into flexible rate of interest was applicable which is higher.
      Was this review helpful? 0
      , kolkata
      Reviewed on May 19, 2019
    • Indian Bank Home Loan
      "BAD CUSTOMER SUPPORT"
      0.5 2.5/5 "Just OK"
      The customer support is not good, the documentation process was not easy it took time get the loan. The approval also it took time to get the loan. The loan amount was good, rate of interest was higher than others, there was a processing fee with this loan.
      Was this review helpful? 0
      , thane
      Reviewed on May 19, 2019
    • DHFL Home Loan
      "BETTER"
      0.5 3.0/5 "Satisfactory"
      I have applied for the home loan with the DHFL and the rate of interest was higher with this loan also it is a floating where the rate of interest was increase higher within 6 months. The documentation process was not good and it took to get the loan.
      Was this review helpful? 0
      , kolkata
      Reviewed on May 19, 2019
    • HDFC Limited Home Loan
      "Good bank to apply for home laon"
      0.5 4.0/5 "Great!"
      I have taken a home loan in HDFC LTD before 3 months ago. The process was done on smooth and received a loan amount as per my expectation for the duration of 15 years. The rate of interest and processing fee is nominal in this bank.The good which I would like to share is documentation process was done on easy.
      Was this review helpful? 0
      , chennai
      Reviewed on May 18, 2019
    • Canara Bank Home Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I have taken Home Loan directly with CANARA bank past 5 years. I received the loan amount as per my expectation for the tenure of 17 years ,still the loan is on process,I have got the loan amount on time without any delay. At a verification process was good and smooth. The rate of interest and processing fee is nominal.
      Was this review helpful? 0
      , coimbatore
      Reviewed on May 18, 2019
    • ICICI Bank Home Loan
      "Best service"
      0.5 5.0/5 "Blown Away!"
      I had applied for a Home loan with ICICI BANK at the time when i was looking for Home loan. There was no delay in my application and it took few days to get things done. The interest rates to be nominal . The loan amount which they gave was satisfactory .
      Was this review helpful? 1
      , hyderabad
      Reviewed on May 18, 2019
    • Axis Bank Home Loan
      "BETTER"
      0.5 3.5/5 "Pretty good"
      I have applied for the home loan with the HOME LOAN with the AXIS BANK where th banking process was good get the loan the documentation process was simple and easy to get the loan. The rate of interest was nominal also the loan amount given was good.
      Was this review helpful? 1
      , kolkata
      Reviewed on May 17, 2019
    • DHFL Home Loan
      "Interest rate shoud be reasonable"
      0.5 3.0/5 "Satisfactory"
      In DHFL the housing loan interest is currently 10.30% for the loan amount of Rs. 40 lakhs . I took for the duration of 25 years, initially they gave me 9.4% of interest now they revised higher as per the RBI norms. When I apply for the loan I have to run behind them, the process was not smooth.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 17, 2019
    • L&T Housing Home Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I have been taken a home loan in L&T FINANCE LIMITED for the past 2 to 3 months. The loan amount was sufficient as per my expectation for the duration of 30 years. The rate of interest is nominal.The customer service is good and responsiveness on time.
      Was this review helpful? 1
      , pune
      Reviewed on May 17, 2019
    • ICICI Bank Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I had taken my Home loan from ICICI Bank a long time back where the experience i had was quite comfortable. They did not took much time for the process, and the disbursement was made on the right time. The loan amount has been fine, the interest rate has been quite nominal and they had not made any sort of additional charges. Overall it had been quite a good experience.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on May 17, 2019
    • Punjab National Bank Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I had taken my Home loan from PNB HOUSING FINANCE LIMITED a while back and the process in getting the loan was pretty much easy. The loan amount has been sufficient and the interest rate which they had made has been nominal, the processing fee and charges where not high and there has not been any issues faced with their services.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on May 17, 2019
    • Allahabad Bank Home Loan
      "Need improvement on the customer support"
      0.5 5.0/5 "Blown Away!"
      I took home loan from ALLAHABAD BANK they gave me lowest interest in the market, it was around 8.7% for the loan amount of Rs.33.5 lakhs for the duration of 25 years., the process was easy but the customer support is not that great they need improvement on that part.
      Was this review helpful? 0
      , noida
      Reviewed on May 17, 2019
    • SBI Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan in SBI bank for more than a year. As per my expectation I got the loan amount for the duration of 20 years. The rate of interest is nominal. Fee charges was applicable. The customer service is good and responsiveness on time.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 16, 2019
    • LIC Housing Home Loan
      "Good service"
      0.5 3.0/5 "Satisfactory"
      I have directly applied with LIC Housing Finance Ltd Home ,rate of interest and the processing fee was nominal .I have applied for the loan amount of 30lakhs for the tenure of 15years ,still the loan is on process .I have got the loan amount sanctioned on time ,it was sufficient ,the agent gave all the information about the housing loan ,started paying and completed 3years so far .
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 16, 2019
    • HDFC Limited Home Loan
      "Processing should be reduced"
      0.5 4.0/5 "Great!"
      They took lots of processing fee from HDFC home loan from my end, I availed Rs. 36 lakhs and they charged me Rs.30,000 processing fee. I got all the information through online. HDFC limited has balance transfer option, it was quickly processed.
      Was this review helpful? 0
      , pune
      Reviewed on May 16, 2019
    • SBI Home Loan
      "Excellent "
      0.5 5.0/5 "Blown Away!"
      My home loan is running with SBI, the interest rate is very low but they gave me longer duration. I took the amount Rs.17 lakhs for duration of 20 years, the process fee was nominal around Rs.10,000 including insurance fee. The documentation are very simple, bank staff gave me nice response as well.
      Was this review helpful? 0
      , vadodara
      Reviewed on May 16, 2019
    • ICICI Bank Home Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      I had taken my Home loan from ICICI Bank a while back and the process in getting this loan has been pretty much simple. The loan amount has been sufficient and the interest rate has been nominal as well. The loan is still running and the they had not taken any sort of additional charges so far.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 16, 2019
    • Bank Bazaar Home Loan
      "Better"
      0.5 5.0/5 "Blown Away!"
      Thanks to Bank Bazaar Team . I am using bank bazaar site last few years. My experience is very good about Bank Bazaar.The process was good and overall am satisfactory. It gives better idea about interest rate on online comparison..........
      Was this review helpful? 0
      , chandigarh
      Reviewed on May 16, 2019
    • IDBI Home Loan
      "Need overall improvement"
      0.5 2.0/5 "Expected more"
      I have housing loan in IDBI, the interest rate was very higher around 9.1% but still its floating if we see other bank they are charging only 8.7% , I took Rs.30 lakhs for the duration of 20 years, they taken insurance fee and processing fee. The customer support is not transparent, the interface is very difficult to understand.
      Was this review helpful? 1
      , coimbatore
      Reviewed on May 16, 2019
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