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  • Personal Loan BYTES FROM OUR KITCHEN

    Reverse Mortgage Loan

    What is Reverse Mortgage Loan?

    Reverse mortgage loans are a unique type of home loan designed for senior citizens and require no monthly mortgage payments. Borrowers do still have to pay other expenses like property taxes and home insurance premiums. The loan payments need not be made until the borrower passes away, sells or moves out of the house. There are no restrictions on the end use of the funds obtained via a reverse mortgage loan.

    It is called reverse mortgage because the lender is making payments to the borrower. The loan needn’t be paid back till the home is sold or vacated. The borrower must however pay the property taxes, insurance and other dues.

    Reverse mortgage comes in handy when you have a financial crisis and no source of income to fund your financial needs, but you have a house and you can use that house to mortgage and avail loan.

    Home is pledged and the monetary value of the house is decided based on the demand for the house, current property prices and the condition of the house. The loan amount is then disbursed to the borrower in the form of periodic payment. The borrower can choose the frequency of the periodic payment. This is an ideal option for senior citizens so that they get regular income.

    Features of Reverse Mortgage Loan

    Eligibility

    Individuals owning residential house or flat and who is a resident of India and above the ages of 60 can avail this loan.

    The residential house must be in his name or jointly with his spouse.

    If the loan is in joint account then one of the spouse must be 60 years and above and the other must be at least 58 years.

    Margin

    20% margin has to be maintained.

    Maximum loan amount

    The maximum loan amount is Rs.1 crore along with interest.

    Lump sum pay-out is permitted in the event the borrower or his spouse has to undergo medical treatment. The maximum limit on that is Rs.15 lakhs.

    Disbursement and loan tenure

    Maximum tenure allowed is 20 years.

    The amount paid to the borrower per lakh is as follows:

    Tenure

    Monthly instalment (Rs.)

    10

    432

    11

    365

    12

    311

    13

    267

    14

    229

    15

    198

    16

    172

    17

    150

    18

    130

    19

    114

    20

    100

    Processing charges

    Amount equivalent to half month’s loan instalment is charged as a processing fee.

    Security

    The residual life of the residential property has to be at least 20 years old.

    Repayment

    The legal heir of the borrower, after the borrower’s death will have the chance to settle the loan along with the interest without having to sell the property. The loan is due and is to be paid in 6 months after the death of the last surviving spouse.

    The borrower can also pay the loan at any time during the loan tenure, if he wishes to and has enough funds to pay for it.

    Prepayment charges

    If the loan is transferred to another lender, usually a 2% fee is charged.

    Insurance

    The borrower has to cover all the home insurance premiums.

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