The scheme of reverse mortgage
has been introduced for the benefit of senior citizens owning a house but
having inadequate income to meet their needs. Some important
Features of reverse
mortgage are:
a) A homeowner who is
above 60 years of age is eligible for reverse mortgage loan. It allows him to
turn the equity in his home into one lump sum or periodic payments mutually
agreed by the borrower and the banker.
b) NO REPAYMENT is
required as long as the borrower lives, Borrower should pay all taxes lating to
the house and maintain the property as his primary residence.
c) The amount of loan is
based on several factors : borrower’s age, value of the property, current
interest rates and the specific plan chosen. The valuation of the
residential property is done at periodic intervals and it shall be clearly
specified to the borrowers upfront. The banks shall have the option to revise
the periodic / lump sum amount at such frequency or intervals based on
revaluation of property.
Settlement - The loan shall become due and payable only
when the last surviving borrower dies or would like to sell the home, or
permanently moves out. On death of the home owner, the legal heirs have the
choice of keeping or selling the house. If they decide to sell the house, the
proceeds of the sale would be used to repay the mortgage, with the remainder
going to the heirs.
As per the scheme
formulated by National Housing Bank (NHB), the maximum period of the loan
period is 15 years. The residual life of the property should be at least 20
years. Where the borrower lives longer than 15 years, periodic payments will
not be made by lender. However, the borrower can continue to occupy.
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