A reverse mortgage loan is a beneficial financing option curated for senior citizens, which enables them to meet regular funding requirements conveniently. Any homeowners above 60 years can, individually or jointly with a spouse of at least 55 years of age, mortgage his/her property to avail this loan.
A borrower will be sanctioned a certain percentage of his property as a loan paid either in monthly instalments for 20 years or in one time lump-sum amount. A reverse mortgage loan does not impose any immediate financial liability, as the borrower does not require repaying the loan in monthly EMIs.
There are several reverse mortgage benefits that ensure financial stability and makes it a truly gold walking stick for senior citizens.
5 ways in which reverse mortgage loan proves advantageous for senior citizens
-
Improvement in immediate finances
A reverse mortgage is an exact opposite of a loan against property scheme. In case of a loan against property, a borrower takes a lump-sum loan by pledging his house, which he/she repays in monthly instalments over certain tenor.
On the other hand, under a reverse mortgage scheme, borrowers receive monthly, quarterly or yearly payment from the lenders, which can go up to about Rs.50000 per month. Hence, reverse mortgage facilitates an immediate improvement in finances and helps to meet daily expenses effectively.
-
No-end usage restriction
Just like a LAP loan, reverse mortgage loans come with no end-use restriction. Borrowers can use the loan amount to meet any financial expenses like medical, daily essentials, repairs and renovations etc. Furthermore, borrowers can also use the credited amount to repay back any outstanding loan taken for the same property.
-
No-defaulting risk
A reverse mortgage, unlike a loan against property, does not impose any liability on the borrowers to pay back the borrowed amount immediately on monthly instalments, hence, incorporates no defaulting risk. Furthermore, there is no immediate transfer of possession. It is only when the borrower and his/her spouse cease to reside in the house permanently or inn case of demise that the financial institution will proceed for auction to reclaim back the loan amount.
-
Minimum eligibility criteria
You can only qualify for a loan against a property by meeting several important eligibility criteria. But that is not the case for a reverse mortgage. All one needs to ensure is that the borrower is at least 60 years old, should have resided in the property for at least 20 years and that there are no liability or litigation issues with the property.
-
Repayment-benefit
After the demise of the borrowers, any legal heir can repay the borrowed amount with a rate of interest which is considerably less than a loan against property interest rates, to claim the ownership right of the property. Furthermore, during the repayment, one just needs to pay the market value of the mortgaged property irrespective of the sanctioned loan amount.
Borrowers must also look for pre-approved offers provided by several financial institutions on reversed mortgage loans to simplify and accelerate the lending process. These offers are available on multiple financial products like home loan, loan against property, etc. One can check these pre-approved offer by simply sharing the name and contact details.
Now that you have learnt the benefits of a reversed mortgage loan make sure to avail a reliable financial institution and verify the charges on your loan against property and reversed mortgage loan. Furthermore, also check and compare the reverse mortgage and loan against property eligibility criteria respectively between various financial institutions to make an informed decision and to avail maximum benefit.