Looking at the current financial & economic condition, It is very difficult to build a house in the running condition, if you are smart about saving then you can able to build a dream house.
After retirement, the income is almost zero, and then how you can survive. your house property can work for you as the reverse mortgage in banks.
What is reverse mortgage and how it works
The reverse mortgage is a type of Home loan of older age people.
The reverse mortgage gives the right to the consumer to dive into the equity or value of the house, a loan in installments until they die, sell or move outside the house.
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There is no such mortgage security required, interest will automatically be added to the principal amount.
The installment is fixed according to the market value of the house and time period.
In Canada:- the Loan value doesn’t exceed the fair value of the House.
How Reverse mortgage works?
As compared to the reverse mortgage and conventional mortgage –reverse mortgage in India, the house owner get the amount to purchase the house while mortgaging the house & have to pay a certain installment amount alone with the interest and the equity share increases by every installment to the owner of the house.
In reverse to reverse mortgage, the amount received in installments according to the fair value of house till the owner dies, and the Loan amount needs to the repay by the second owner of the house, or the bank will sell the house and pay the amount to the second holder after deducting the principal amount along with interest.
Looking at the current scenario of the market and pension policy for the private job holder, the older age people can avail of the facility provided by the Financial Institutes. after USA, Canada & UK, India is picking the same tread.
Eligibility for Reverse mortgage
- The applicant must be a citizen of India.
- Should be above 60 years of age.
- The property should be self-owned by the applicant and the property is located in India.
- The loan amount is fixed by the different financial institutes according to the different valuation pattern and maximum loan criteria eligibility.
In India, the popularity of Reverse mortgage loan (RML) is very low, most of the people are not aware of the scheme.
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There is two variant of RML:
Regular RML & Reverse mortgage loan-enabled annuity (RMLeA)
In Regular RML you will get the lump sum amount or in installment for the frequency, you opt for.
If you opt for RMLeA you don’t make to pay back the loan amount until you live in your house or your lifetime.
As per financial advisors, if you don’t have the regular income or any pension facility available, the Reverse mortgage is a good option.