What is needed?
A debt free residential house in good condition which can be used for a period of at -least next 20 years standing in the name of the borrower who should be more than 60 years of age. Spouse who is a joint owner of the borrower if less than 60 years (but not less than 55 years) of age can also join the scheme.
Loan value
The 60% of the property value with a maximum limit of INR 1 Crore. The property will be re-valued once in every 5 years and the loan may be reset based on the revised valuation.
Legal requirements
Eligible borrowers should own their property with free and clear title, well maintained livable unit or flat, by paying government taxes in time, remaining usable life of the property be minimum 20 years, availability of all the legal documents for mortgage etc. are the requirements on legal related aspects
Rate of Interest
- Fixed and floating rate of interest are charged as opted by such borrower
Loan Tenure
- Range between 5 to 20 years depending on the age of the borrower. Lesser the age – Longer the term.
Disbursement
One can either go for fixed cash drawing route or lump sum cash in advance and periodical monthly cash withdrawal method. This may be more helpful to the seniors to spend some money for their major medical treatment or to meet out their debts etc. There after the Senior will receive equal monthly payment for their day-to-day living for a fixed period of months selected by him.
Withdrawal Amount Per Month
More the age -More the withdrawal. Since the livable period of a senior is less if they are more aged this system might prevail.
Existing Housing Loan Absorption
If the property is already mortgaged with a housing loan company and any outstanding loan be taken over by reverse mortgaging companies and from that point on-wards the borrower is free from housing loan repayment obligation
Property Occupancy
The borrower should occupy the property as his/her primary residing house and no such loan can be extended on any other property of the same borrower.
Maintenance of the Property
The borrower should maintain the property in good and livable condition and normal wear and tear should also be managed by the borrower. They should also discharge all the government outgoes.
Recovery of Mortgage Loan
During the tenure of the loan period a borrower may partly or fully close the loan and no per-closure charges are levied for that loan.
Forced End
- Upon death of a borrower or if joint borrowers upon death of both the borrower
If the borrower moves out of the house permanently or the borrower does not occupy the property for more than 12 months continuously with-out proper intimation or justification to the lender
Legal heirs
If the borrower dies during the loan tenure, the legal heirs if any, may settle the loan with the bank / financial institutions and take the property from the lender (Or)
The property will be normally be sold by the borrower or the borrower’s estate to pay-off the outstanding balance on the mortgage.
Till the loan is closed no legal heir can claim the property’s ownership. They can also close the loan after the life time of the borrower and transfer the property in their name.
Continued living
The borrower and his/her spouse can continue to live in the same property even after the completion of loan tenure and they cannot be vacated for non-payment of loan.
Advantages of Reverse Mortgage
- Hassle free money flow management after the retired life
Threat against elders by anti-social elements on property related matters are avoided since it is mortgaged to lender (Banker)
Legal heirs cannot claim any settlement, or they cannot give unnecessary inconvenience on property related matter and they can only take away the property only after settling the loan with the bank
- Any emergency medical care can be managed by the senior without financial trouble
- This not only takes care of the borrower but also his/her spouse
To Conclude
No doubt in elderly living period money is the vital strength to meet out everything. However, the condition put forth by the lender, forcing the borrower to use the house as their primarily living house, does not cover the option of leading their life in Assisted Living Facilities. Mobility, Day to day Medical Care, Periodical Medical Checkups, Timely Food, Secured Accommodation etc., are highly provided in Elderly Care Centers and Assisted Living Centers at competitive cost within campus, makes the elders life highly peaceful and secured. Instead the lender can also rent out such property and realize the income on behalf of the senior by which their monthly income not only goes up but also their personal life care and living standards are kept in higher levels.