Avail loan by mortgaging your house

K. ARAVIND

Reverse mortgage loan is the least popular financial services in India. This is a financial service that is the exact opposite of a home loan. A reverse mortgage loan is a method of mortgaging a home and securing a fixed income if it is a mortgage.

This is a method that senior citizens can rely on when they have no other source of income. For senior citizens who don’t want to depend on their children for income, this method can be seen as the last resort they can rely on to move on with their lives without financial hardship.

The homeowner receives a loan at a fixed percentage of the value of the house by mortgaging the house with the bank. Normally, it is 60-65% of the house price. For example, a house worth Rs.1 crore can get a loan of Rs.60-65 lakh. The landlord can accept it as a lump sum or as a monthly installment. If the money is received in a fixed amount per month, it will be for a fixed period. The maximum duration is 15 years. The proceeds will not be subject to income tax or capital gains tax.

Until the end of this period, the homeowner will continue to receive a fixed income from the bank. After this period, the homeowner can stay in the house for the rest of his life. The homeowner is not liable to repay the loan until death. After the death of the homeowner, the children can repay the loan and retain ownership of the home. If the children do not repay the loan, the house will have to be handed over to the bank.

The homeowner can sell the home to another person. If you decide to do so, the loan must be repaid before the sale can take place.

Normally, the minimum age for obtaining a reverse mortgage loan is 60 years. If the couple is taking out a loan together, the wife must be at least 58 years of age. The tenure ranges from 10 years to 15 years, depending on the age of the borrower. SBI, the country’s largest commercial bank, has a maximum mortgage loan of Rs.1 crore. The minimum amount is Rs.3 lakhs. The interest rate charged by SBI on such loans is currently 9.05 per cent.

The reverse mortgage loan scheme is the least popular loan scheme in India as the emotional value of the home is very high. At the same time, if there is no other source of income, the scheme can be relied upon as a last resort. Those who are emotionally attached to their house and wouldn’t want to shift to a rented house selling their house can resort to reverse mortgage and avoid such drastic change in lifestyle.