A reverse mortgage loan is a scheme specially designed for the senior citizens of the country. Senior citizens and retired individuals who do not have a regular source of income can apply for the reverse mortgage scheme to borrow funds for emergencies and other purposes. Thus, the borrower will not be required to make monthly payments and instead mortgage their property to avail this loan.
Important points to check before you apply for a reverse mortgage loan
You need to consider the following 5 factors before you take a loan or mortgage your property in the form of a reverse mortgage loan –
- Property valuation
The amount you can borrow from the lender is computed based on your property’s current market price. Several factors are taken into consideration, such as the condition of the house, market stability, prices, and the current demands for a property. Every 5 years, lenders evaluate the mortgaged property and in case if there is any change in property valuation, the loan amount also changes.
Make sure your house is in proper condition to avail reverse mortgage India.
- Taxation
If you know how to avail tax benefits on your loan against property, then you can claim for tax exemptions under this scheme as well. Section 10(43) of the Income Tax Act allows borrowers of the reverse mortgage loan to reap tax benefits.
- Co-applicant
Before opting for a reverse mortgage loan, borrowers must check what will happen to their spouse if he/she passes away during the repayment period. In such a case, if both the spouses avail this scheme as co-applicants, disbursals to one spouse will continue even after the demise of the other partner.
- Payment options
Under this scheme, borrowers will receive a lump sum payment or a fixed amount disbursed monthly, quarterly or annually. However, the maximum amount you can borrow is up to Rs. 50,000 per month.
The reverse mortgage loan also provides the facility to borrow funds during emergencies. At times of medical emergencies, beneficiaries can avail funds up to 50% of the total sanctioned amount or a total sum of Rs. 15 Lakh, whichever is lesser.
- Look for the rate of interest
The rate of interest varies depending on the lender. Before you opt for a reverse mortgage loan, check the interest rates so you can repay the amount after the end of tenor.
What are the benefits of a reverse mortgage loan?
Borrowers applying for a reverse mortgage loan in India will receive the following benefits –
- Improve your finances
Since you will not have to make monthly payments, the loan amount you will receive will improve your accessibility and disposability of instant finance.
- Loan flexibility
Senior citizens who opt for a reverse mortgage loan can use the borrowed funds with flexibility for any requirement they face.
- Low risk
Retirees opting for reverse mortgage scheme remain in possession of their property unless they choose to permanently leave it. Borrowers will not face any risk of non-payment as long as they pay their taxes and insurance in time.
- Benefit on repayment
Borrowers are entitled to receive the mortgage property’s market value regardless of the loan amount sanctioned by the lender.
These benefits can be enjoyed by availing the reverse mortgage loan in India. A majority of financial institutions and NBFCs in India provide these benefits on reverse mortgage schemes to the borrowers.
Companies like Bajaj Finserv also bring other types of credits, such as loan against property, for individuals who need large scale financing. They also provide pre-approved offers that make the process of availing loans convenient while saving your time. These offers are also available on home loans, business loans, personal loans and other financial products. You can check your pre-approved offer by providing a few essential details like your name and contact number.
What are the eligibility criteria to avail a reverse mortgage loan?
To avail a reverse mortgage loan, the applicants are required to meet the following eligibility criteria –
- Since these loans are specially curated for senior citizens and retired individuals, the applicant’s age should be minimum 60 years.
- The mortgaged property must be free from any legal constraints.
- Property must be at least 20 years old.
- The mortgaged property should be the borrower’s permanent residence.
Now that you know how you can benefit from a reverse mortgage loan, you can apply for the same financial product or a loan against property scheme online. Make sure to check the terms and conditions before you zeroing in for a loan.
