According to the United Nations, the percentage of individuals above the age of 60 years out of India’s total population has been expanding at an increasing rate in the last few years. This trend is expected to continue, with the senior citizens comprising about 20% of the country’s total population by 2050.
For such individuals, a reverse mortgage loan can be the perfect option to finance any big-ticket purchases, as well as their daily requirements.
A Look at Reverse Mortgage in India
–> 103.9 million – Number of individuals above 60 years of age in India in 2016, according to the 2011 population census.
-> Rs. 1800 Crore – Quantum of loans sanctioned under reverse mortgage scheme till 2013.
-> Rs. 50,000 – Maximum monthly payment cap for an individual under reverse mortgage plan.
Reverse mortgage scheme was introduced by the Government of India in the year 2007-08 with an aim to provide individuals above the age of 60 years with a supplement income. Under this unique credit scheme borrowers do not need to make monthly repayments against the advance they avail from a financial institution.
In turn, the lender provides borrowers with an amount against their mortgaged property, either through lump sum payment or monthly installments.
Benefits of Availing a Reverse Mortgage Loan
With this scheme, senior citizens can enjoy several benefits which can help them to have a regular source of income post-retirement. These are as follows –
-> Financial Stability
A reverse mortgage allows individuals to avail a steady source of income after retirement. Individuals can avail a monthly payment against their mortgaged asset’s value from any financial institution in India, which can help cover their financial requirements.
Further, they can also opt for a lump sum payout which can be beneficial during medical emergencies, funding expensive purchases, repaying existing loans, etc.
-> No End-Usage Restrictions
One of the most attractive benefits of a reverse mortgage is that the amount availed under it does not have any end-usage restrictions. It can be utilized to fund any number of expenses, including medical costs, repayment of existing loans, or any number of other financial requirements.
-> Taxation Benefits
The income from individuals through a reverse mortgage is tax-free under the Income Tax Act, 1961.
-> Low Risks of Defaulting
When you mortgage your residential property, it remains under your possession until you vacate it permanently or till your death. The loan, as a result, attracts no risks of non-payment as long as you keep paying insurance and taxes on the property.
-> Benefits on Repayment
If an individual chooses to repay the advance availed against their property after completion of loan tenor, he/she will only have to pay the property’s market value. This benefit is applicable even if the amount of loan sanctioned is greater than the property’s value.
-> Disbursal Benefits
An individual can opt for a lump sum payout or monthly installments against the value of their mortgaged property, according to their requirements.
With such benefits and more, reverse mortgage loan in India are extremely beneficial for individuals after their retirement.
Eligibility Criteria to Avail Reverse Mortgage
To avail the benefits of reverse mortgage, individuals will have to satisfy some simple eligibility criteria put forth by financial institutions, viz. –
-> One must be above 60 years of age.
-> One must be in possession of the property to be mortgaged for a minimum of 20 years.
-> The property should not have any liabilities or on-going litigation issues.
Alternatively, if one does not satisfy these eligibility criteria, they can opt to avail funding through a loan against property from any of the financial lenders in the country.
This advance from NBFCs allows individuals to avail a high loan amount value of up to Rs. 3.5 Crore at affordableloan against property interest rate. It also offers several benefits like easy loan disbursal, flexible tenor, balance transfer facility, etc.
Additionally, NBFCs also provides pre-approved offers that can make availing the advance faster and easier. These offers are available on several financial products, including home loans, business loans, personal loans, etc. You can check your pre-approved offer by providing your name and phone number.
But before applying for this advance, it is crucial for individuals to check the eligibility criteria and list of documents required to apply for a loan against property. It makes the process to avail the advance significantly simpler.