If you’re a senior citizen and dealing with monetary issues given the restricted sources, then a reverse mortgage scheme is right here to spice up your month-to-month earnings. The scheme was launched by the federal government again in 2007 is greatest suited to retired homeowners who should not have a residual month-to-month earnings and their earnings is underneath stress on account of low returns from mounted deposits and different debt schemes.
The scheme, nevertheless, by no means gained recognition and was not marketed by banks too. However given the present situation, this might be a superb time to contemplate reverse mortgage because the rates of interest are low.
For a layman, a reverse mortgage scheme is a loan supplied by banks for a most interval of 10-12 years. However, what differentiates reverse mortgage from different loans is that the loan quantity shouldn’t be paid by the borrower however the authorized inheritor.
The banks determine the loan quantity after evaluating the home and its location, and the utmost loan quantity supplied is Rs 1 crore even when the property is worth far more. For compensation, the banks both promote the property after the senior citizen’s demise of the authorized inheritor or nominee pays again.
There are two payout choices – common mortgage immediately from the bank and annuity primarily based loan the place the bank sanctions a lump-sum quantity however offers it to an insurance coverage firm which in flip calculates annuity after which pays both month-to-month, quarterly, half-yearly or yearly.
The loan quantity acquired as month-to-month instalment or lump-sum is exempted from tax as it isn’t handled as earnings earned. In Indian tradition, the place the household home is connected with emotional bonding and is usually handed on to the youngsters or authorized inheritor, the scheme stays extremely unpopular.
Even for the banks, if a senior citizen takes a reverse mortgage loan for 10 years and continues to reside for 40 years, the lender has to simply look ahead to the borrower to die to recuperate the quantity.