Reverse Mortgage Loan (RML):
In pre independence era, joint families were a norm and the aged senior citizens were taken care of by the members of Hindu Undivided Families (HUF). After independence, owing to family planning, among other factors, younger generation started moving from villages to urban areas, leading to more nuclear families. Resultantly, seniors were left in villages / towns without any regular source of income.
Children of seniors are the “Sandwich Generation”. While their kids are heading for college, they also have retired parents to be taken care. In such a situation, it becomes difficult for the children to manage the home finance. So the best option available is to tap the home equity.
Reverse mortgage is a loan available to the home owner, who is above 60 years, to convert a part of the equity in his or her home to CASH. It is just the opposite of a normal Housing Loan and is available only to senior Citizens since 2007 in India. It helps the retirees with limited income to use their homes to cover the basic monthly living expenses and pay for their health care.
In this scheme, you need to pledge your house to the bank. Bank will arrive at the value of the house and after adjusting for the interest and price fluctuations, the bank will disburse the balance over a period of maximum 15-20 years, based on the payment option you choose. The payment is considered as a loan and hence will not attract any tax liability.
Even after the tenure is complete, you can continue to stay in your house. If either of the spouses dies, the other can still continue living in the house. Only if you leave the property permanently, or in case of death (both), the bank will sell the property. From the proceeds, it will take the amount that is payable by you to the bank; the balance will be distributed to your legal heirs. Or their heirs can settle the overall outstanding loan and retain the house.
Appeal: There would be many honorable senior citizens living in your close vicinity. We urge you to make them aware of the scheme and help them with an open heart. We believe that it is never too late to start an effect for a noble cause.
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