We all know about Home Loans. But do you know about the reverse mortgages? Reverse Mortgage is completely opposite from the home loan. So let’s first see the complete details of mortgages.
What is Reverse Mortgage?
When you take a home loan, you take a large amount and buy a house. Home loan is for a period in which you return the principal and applicable interest to the bank with the help of EMI. As you fill this EMI, your packets grow in your house as well. And when your home loan is finished, then you are the owner of the house in a complete way.
In the case of reverse mortgages, you have your home completely at the beginning of the loan period. But as time goes by, Periodical Bank gives installments to you in this loan period. As the bank gives installments to you, your stay goes down in this house and the bank keeps on growing. At the end of the loan period, the house becomes bank fully.
What is the Need of Reverse Mortgage?
In 2007, the Union Government of India introduced the reverse mortgage. Those who retire for those who have their own house, but they can not afford.
Having a home in India is a big deal. So even though this is our basic accessory. But it is also a big expenditure of our lives. That’s why we have a home in retirement days, but there are no other assets that can cost us retirement.
So in such a reverse mortgage is an excellent solution where you can live with Dignity in your own home, without any financial dependency. Nobody wants to raise their expenses by selling their home. But if your children are in another city or in another country where they have their own home and you need money, then you can use reverse mortgages.
Reverse mortgages can also work, when there are regular regulatory expansions in retirement days, about which you have not planned in your earning days.
How Reverse Mortgage Works?
Whatever is the market value of your home, the maximum is available in the form of 60% amounts. Which is 40% of the rest, it is for adjusting the interest and market flats on your loan. The bank divides the maximum amount where you can get loan ranging from Rs 50 lakh to Rs 2 crore.
You can take this loan with fixing or floating interest. The maximum period of the loan is 15 years. Some banks also offer a period of 20 years. And the minimum period of the loan is 10 years old.
The payout options for these can be taken in the form of Monthly, Quarterly, Half Early, Early, and Lumpsum. If you go for a lump sum payout then the maximum value of 50% of your home’s market value can be found in the Lumax form.
If you go to the monthly payout options, currently 50 thousand cap option is placed on it. Property revolutionary occurs every 5 years. So if the cost of your home is large, then you become more comfortable for an additional loan. It is necessary to create and register for Reverse Mortgage.
Benefits of Reverse Mortgage
- First, you know that it gives you the regular stream of income.
- Secondly, due to this being a loan it is not taxed.
- Anyone who is a Borrower can afford a loan without any charge whenever he chooses.
- Payouts are closed when the loan expires. If Borrower is alive even after this loan period, then he can live with his wife in this house.
Also, read: The Benefits of Mortgage Repayment
Eligibility of Reverse Mortgage
- Owners must be 60 years of age or older when taking such a loan. If the wife is an applicant on such loans, then their age should also be 55 or more.
- This house should be earned by itself. That is, it should not be mixed in the heritage or as a gift. It must be a residential property, should be a self-occupied, and must have a clear title and citizenship of that country.
- This home should be your primary and permanent residence.
- There should be no loan at home when taking such a loan. And the age of the house is at least 20 years and the situation is worth living.
In What Condition the Bank can Refuse this Loan?
- If the Borrower does not live in that house for more than a year then the bank refuses this loan.
- If Borrowers do not fill property tax or they have not taken home insurance, then the bank may refuse this loan.
- And then, when Borrower declares himself bankrupt.
- The bank can foreclose such loans even if the property is donated or the owner leaves it.
- If there are any changes in the property such as the Structural Changes due to which the impact on the security of the loan or any new owner has been added to the titles then the bank can still refuse this loan.
When is the Reverse Mortgage Loan Payable?
In the first place where the last Borruver dies. So here the first legal heir will be given chance to settle this loan. If Legal Hero is not in the position to settle this loan, then the bank sells it to this house. If you get the value of your property above the amount of money the bank should get, then the additional amount is paid to your Legal Hers. Since this asset is sold on sale, then on this extraordinary amount you have to pay your legal hire to the capital gains tax.
Second Situation in which reverse mortgage loan becomes payable when borrower himself sells his house. So, whatever the money should be received by the bank in this condition, it is necessary to reserve the borrower by adding interest and principal.