A reverse mortgage loan falls under the loan against property scheme which is specially designed for the senior citizens and retired individuals residing in India. Pensioners who do not have a regular source of income can apply for this mortgage financing to borrow funds for creating a source of income.
There are several reasons why senior citizens should choose a reverse mortgage to create a source of income after their retirement. Let’s take a look.
What are the Benefits of a Reverse Mortgage Loan?
Use Your Funds with Flexibility
When you avail of a reverse mortgage loan in India, you can utilize the funds for any purpose. For example, you can withdraw money during medical emergencies, family requirements, or even for property renovation and reconstruction. Financial institutions also offer the provision to withdraw a lump sum amount to fulfill any requirement occurring during unforeseen circumstances.
Valuation of Your Property
Lenders decide the loan amount based on your property’s current market value. This is estimated based on various factors such as the condition of the house to be mortgaged, the current demand for a property, fluctuation of prices, etc. Moreover, every 5 years, lenders conduct an evaluation of the mortgaged property. The loan amount might change depending on the change of current market value.
Claim Tax Exemptions
Borrowers of reverse mortgage loan are entitled to claim tax exemptions under Section 10(43) of the Income Tax Act of India.
Avail Better Payment Options
Under the reverse mortgage scheme, lenders disburse a fixed amount on a monthly, quarterly or annual basis. Borrowers can also choose to receive a lump sum amount from the lender. Although, the maximum amount a borrower can withdraw in a month is up to Rs. 50,000.
This scheme provides the facility to withdraw funds in case of emergencies. In case of medical emergencies, lenders allow beneficiaries to borrow funds of up to 50% of the total sanctioned amount or a total amount of Rs. 15 lakh.
Better Interest Rates
Since reverse mortgage comes under the loan against property scheme, lenders levy comparatively lower rates of interest on the mortgaged property. Henceforth, before you seek a loan under this scheme understand the charges on your loan against property.
Avail Loan as Joint Applicants
Reverse mortgage India allows borrowers to avail of this loan along with their spouse. If both spouses avail of this loan as co-applicants, then the lender will continue to disburse the loan amount to one spouse even after the other one passes away.
Low to Zero Risks
Borrowers remain in possession of their house unless both spouse’s death. It eliminates any chances of holding the residential unit by the lender, offering living quarters until both partner’s demise.
Now you can enjoy these benefits by availing the reverse mortgage loan in India. Financial institutions and NBFCs in India provide these benefits to the borrowers as well as credit facilities like loan against property.
What are the Eligibility Criteria for Availing a Reverse Mortgage Loan?
You are required to meet the following criteria to avail this loan –
- This loan is specially designed for senior citizens and retired individuals, thus the borrowers’ age must be at least 60 years.
- Applicants must be an Indian citizen.
- The property to be mortgaged should be the applicant’s permanent residence.
- The property being mortgaged must be at least 20 years old.
- The house should be free from any legal obstructions.
If you know how to apply for a loan against property, then avail this scheme by visiting the website of the lender and enter the required details. The online application is similar for both the schemes.
Henceforth, senior citizens and retired individuals can choose a reverse mortgage loan for a regular source of income. Also, this scheme allows beneficiaries to borrow funds in case of emergencies without any hassle.