Reverse Mortgage Loans - a Growing Popularity

Reverse Mortgage Loans - a Growing Popularity

Launched very recently by the central government, the concept of reverse mortgage loans has been quite popular with Indians. Read the following article to know more about the reverse mortgage loans in India.
Following the footsteps of the western countries, in 2007, the government of India introduced the concept of Reverse Mortgage Loans for the real estate sector. Reverse mortgage loans are usually available to senior citizens that are usually the opposite of the normal home loans available in India. In a typical mortgage loan, a borrower borrows money and then pays the amount back over a particular period of time through the help of Equal Monthly Installments (EMI).
The National Housing Board, the expediter for housing investment in India has made an effort to promote the new system of reverse mortgage for which the period of EMI would be 15 years and the owner of the residential property along with his family can continue to occupy the house until death. The incident mentioned latter can also occur after the time-span of the loan is over.
Statistics show that senior citizens born during the late 1940s or the 1950s that spent their lifetime’s savings in a housing property. Well, it is a fact that over time the values of the property has appreciated in leaps and bounds; however, senior citizens might not have much liquidity as most of their savings have been secured in the form of non-performing assets. Then there are certain percentage of the population those who do not have a steady income either in the form of pension or other resources ; and some have assets that they are not aware how to make use of so as to ensure good returns. Either they are depended on monthly pension (that is probably not enough in this tumultuous economy) or their kids to support them. Such source them might not be enough to support a proper lifestyle. Reverse mortgage can be a good option for them. Keeping these things in mind, the government has introduced the system of reverse mortgage — one of the best options available for senior citizens.
A reverse mortgage loan helps senior citizens to avail a certain amount of money at regular intervals against the mortgage of his or her own house. However, the loan borrower can continue to reside in the mortgaged property until death; but the payment will stop once the duration of the loan expires. Some of the features of the reverse mortgage loans are explained below:

• Senior Citizens are the only beneficiaries of the reverse mortgage loan
• The loan can be availed either in the form of lump sum payments or at regular interval payments like annuity
• The borrower need not repay the loan amount till he occupies the house
• Once the owner dies or vacates the house, it is then that the paybacks are completed. The amount of the loan is recovered through ensues of the sale of the house. If there are any residual amounts left, it is automatically to the ones who are legally declared as owners.
• On the other hand, if someone chooses to opt for the reverse mortgage loan as a committed line of credit, the borrower can receive money whenever required during the entire term of the loan amount.

The residential property is the only sector where the reverse mortgage loans are applicable and where the property is self-occupied by the loan borrower. Such a property is sometimes termed as the ‘permanent primary residence’.
However, one must understand that tenures for reverse mortgage loans may vary from one bank to another. Sometimes interest rates also vary but it is usually very little. Following the current market scenario and of course keeping in mind the economic situations that the reverse mortgage loan has a long way to go; as Indian senior citizens are experimenting and exploring it.

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Author Bio: Sampurna Majumder is a professional writer and a passionate blogger. Presently she is writing content for several websites such as 99acres.com that cover issues and concepts related to the real estate sector. One can also read about commercial property for sale, home loans and other financial aspects surrounding the real estate business.
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