Quick Points To Know About Reverse Mortgage
As per a report released in 2019, about 6% of India’s total population consists of people aged 65 years and above. Out of them, the bulk isn’t covered under any pension scheme and believe their savings to satisfy the daily cost of livelihood. It often results in financial crunches, especially during emergencies, and such individuals are left to defend themselves within the times of crisis.
The reverse real estate loan scheme was thus introduced in 2007 to alleviate the difficulties arising during such situations. Under this scheme, individuals above 60 years aged can tap into a gentle inflow of money by reverse mortgaging their residential properties to the financial institutions offering this scheme. Following may be a check out what reverse mortgage entails and a few details that one should remember of before choosing it.
What does the reverse real estate loan scheme entail?
A reverse mortgage may be a facility under which individuals can leverage the equity lying in their residential property to receive monthly payouts against them via a financial organization.With the reverse mortgage advance, however, individuals can do away with the risks of default, which is extremely beneficial for senior citizens without a gentle source of income.
Apart from this, below are the 5 most vital points to notice about the reverse mortgage –
Repayment of the borrowed amount
Under reverse mortgage schemes, the borrowed amount isn’t recovered until the completion of the tenor or the borrower’s demise. Further, a borrower has got to repay the quantity availed under the scheme as long as he/she decides to manoeuvre out of the house or sell it.Further, within the event of the borrower’s demise before the completion of loan tenor, the repayment liability shifts to his/her heir if opted for. On the contrary, the financial institution can auction the reverse mortgaged property to recover the value of this loan.
Eligibility to choose a reverse mortgage
There are a couple of criteria that the majority of financial lenders put forth to deem a private eligible to choose this facility. These are Borrowers must be a minimum of 60 years aged or above. While choosing a reverse mortgage jointly with a spouse, a minimum of one among the applicants has got to be a minimum of 60 years aged, while the opposite must be a minimum of 55 years old.Properties to be mortgaged should be owned or occupied by the borrower. Individuals cannot avail a reverse real estate loan against properties that are let loose.
- The said property must be freed from any legal liabilities.
- Fees related to a reverse mortgage
Just like the fees of your LAP, you would like in touch a couple of sorts of expenses when choosing a reverse mortgage advance. These are –
- Statutory charges like mortgage registration, stamp tax, etc.
- Fees levied for loan processing.
- If borrowers prefer to switch lenders, they need to also bear prepayment charges.
- Documents required to avail reverse mortgage
To ensure that the appliance process to avail reverse mortgage benefits is hassle-free, individuals must make sure that they keep these following documents handy –
- Identity proof like Aadhaar card, PAN, voter ID, etc.
- Proof of address like passport, utility bills, etc.
Proof of ownership and residence of property. These documents can include land tax receipts, deed, etc.
Even though the list of documents required can vary from one financial organization to a different, most lenders make reverse mortgages available at minimal documentation requirements.
Alternatively, individuals also can avail a loan against property against minimum eligibility requirements and repay at competitive rates with select lenders.Furthermore, these lenders also bring pre-approved offers that make availing these credits faster and more streamlined. These offers are available on several financial products, including loans against property, home loans, etc. Individuals can check their pre-approved offer by providing their name and get in touch with numbers.
Loan amount available
The loan amount available under the reverse mortgage is decided by taking a couple of factors into consideration. These include the property’s current market price, age of the borrower and therefore the lender’s margin.These are a couple of points that individuals must remember before choosing a reverse real estate loan to satisfy their financial requirements. Nonetheless, those failing to suits the eligibility criteria set for this feature can easily prefer to apply for a loan against property to satisfy their financing needs. Unlike a reverse mortgage, these loans are often availed by all, and may even be convenient in addressing a plethora of funding needs almost like the previous.