Western culture has influenced our nation in a big way. As more and more nuclear families are coming up, senior citizens are left with no choice but to make their own financial arrangements in their old age. It is surprising to know that 1/8ths of the world’s elderly population is in India. That accounts to 80 million people! The number of elderly people is growing at an alarming rate. If the overall population is growing at 1.8%, the population of elderly people is growing at 3.8%. Youths also are going to join the senior citizen club in 20 more years.

It is not an exaggeration that most of these senior citizens either have little savings or no savings at all. They are dependent on their children even for their basic needs. Their mortality rate has come down due to advancement in healthcare sector. Senior citizens are not able to fulfil their basic necessities only on their pension as the inflation has skyrocketed. As most of them keep their savings in Fixed Deposits , the returns are not able to meet their expenses. Like in western countries Indians have no social security benefits. Financial illiteracy has played a nasty role.

What is Reverse Mortgage Loan?

Reverse mortgage Loan is a scheme for senior citizens. This is a Home Loan Product . This scheme helps them get additional income in their old age. Senior citizens can convert their house property into regular income as long as they are alive. Many banks and financial institutions are offering this scheme. The borrowers don’t have to repay the loan in their life time and they get to stay in their house. Branches of Banks where Reverse Mortgage Loan is offered.

Features of Reverse Mortgage Loan

This scheme should be considered as a last resort only.

• Any senior citizen above the age of 60 and having own house can apply for reverse mortgage loan.
• Married Couples also can apply for this. In that case atleast one of the married couples should be above the age of 60.
• Rules differ depending upon the bank or financial institution.
• The borrower should be staying at his own house with proof of residence.
• The loan amount will be given either by instalment ( monthly, quarterly, half yearly, yearly ) or lumpsum.
• The loan amount will be calculated depending on the value of the property and the age of the borrower.
• The loan amount can't be used for any business purpose or trading.
• It can be used for personal expenses, house maintenance and repairs.
• Borrower has the option of repaying the loan amount along with the interest accumulated if he/she chooses to do so at any time during the tenor without any prepayment penalty.
• The payments from reverse mortgage loan are exempt from Income Tax.

Here you can calculate your Reverse Mortgage Loan

Bank of Baroda Reverse Mortgage Loan

Allahabad Bank Reverse Mortgage Loan

Indian Bank Reverse Mortgage Loan

There are many disadvantages which come with this scheme.

• There are substantial costs involved with it.
• The EMI is calculated on the Future Value of the present loan amount.
• The borrower may have the chance of losing the property he wants to leave for his children, in case the loan amount with interest is not paid back either by the borrower or his children.

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