Mortgage – a very sensitive word, becomes sentimental when parents have to mortgage assets to get a loan for their child’s education or the wedding of their daughters. This same word – mortgage becomes a proud word when it boasts of its kindness and support which it offers to senior citizens in the form of Reverse Mortgage. It is a boon for their hard work of life.
1. Senior Citizens Deserve a Tension-Free Life
After a lifetime of working and taking care of the families, all senior citizens deserve a good retirement period which is not dependent on the earnings of their children. In this fast paced life, many families think that their elders are a liability and try to get rid of them by either sending them to old age home or keeping a nurse for them but they are not willing to take care of their parents. These are the same parents who slogged their lives for their children and had kept themselves awake for their children. What are they getting in return, in this old-age? Most of the parents pass on their wealth and property to their children and then these children consider them as a liability. All senior citizens deserve a tension-free life. It is here where reverse mortgage serves as a boon for these seniors.
2. What is Reverse Mortgage?
Reverse mortgage is that loan which serves as an additional source of income for senior citizens. This is available for those who have a self-occupied or self-acquired house in India. The bank pays payments against this mortgage. The property serves as a guarantee for the mortgage loan. The owner of the property is known as debtor or mortgagor and the creditor or the mortgagee is the one who provides the loan. Reverse mortgage is a boon to senior citizens.
3. Who can apply
Anyone who is over 60 years of age can apply and avail reverse mortgage. If a couple wants to apply then the spouse should be more than 58 years. The one who wishes to apply for reverse mortgage must own a house and the property should be at least 20 years old. If a couple applies, then one of them must own a house. A house in which the couple is residing can only be mortgaged, not any other property, that is let out or that is in commercial use.
4. Benefits of Reverse Mortgage
No tax is implied on the payments which the borrower receives from the bank. If the house needs to be repaired or renewed with this mortgage money, the amount that is spent on this will be entitled for deduction in computation of income. One doesn’t lose the ownership of the property even after the reverse mortgage. This is a new type of income which is free from any tax payment. One can even claim deductions on repairs and renovation of a reverse mortgaged home.
The income offers mental peace and social security to the senior citizen. He no more has to depend on his children for his daily necessities. The thought of being financially independent brings back the sense of dignity. They are no more a burden on their children and will not run short of funds or do not have to suppress their necessities. They do not have to service the loan in their lifetime.
5. Reverse Mortgage is a Financial Support
Those seniors who own a property and are residing in it can use the same property for a regular income which they need for their daily activities like food, medicines and others. They need not have to depend on their children. Instead of passing on their property to their kids they can avail the facilities that are provided through reverse mortgage and lead a tension free life. They can maintain their self-respect and will not become a financial liability on their children.
The maximum loan which one can avail on a property can go up to 1 crore with a minimum tenure of 10 years. The borrower can get the instalments as monthly, quarterly, yearly or lump sum payments. The mortgaged property has to be revaluated every 5 years by the bank that has provided the loan.
The main attraction of this loan is that the borrower does not have to pay back the loan. Either the legal heir will do that or the bank will sell the property after the demise of the senior citizen and pays back the entire loan amount. If any amount is left after the payment of bank amount, then that will be passed on to the legal heir. There is another option too. The legal heir can repay the loan after the demise of the borrower and keep the property for himself.
6. Reverse Mortgage- A Boon for Seniors
The scheme of reverse mortgage is termed as a loan sanctioned to senior citizens, who are 60 years or above and own a house. Reverse mortgage is way to provide relief and self-respect to those senior citizens who own a house and who don’t wish to become a liability to their children. This mortgage supports those seniors who do not have enough income to support themselves but owns a house to live. The specialty of the reverse mortgage is that the senior citizen does not have to service the loan during his lifetime. The bank makes monthly payments to the borrower for the property that is mortgaged. In case the mortgager outlives the tenure allotted by the bank for the repayment, then he will not be entitled to get the periodic payments but he can continue to occupy the property. After the demise of the borrower the bank will sell the property to get back the loan amount or the legal heir will repay the loan and keep the property for himself.
The very long prevailing ideology of transferring the property to the children and then depending on them for each and every minute requirement needs a change now. If the seniors own a house then they too can enjoy a peaceful life after retirement without any worry for the daily financial needs through reverse mortgage. This is a boon to the senior citizens.
Gradually a place became a property; the property became a source of mortgage which in turn became a source of income to keep up the self-respect of the owner of the property.
– Written By Pallavi Krishna
