For the past few decades, India has seen steady economic growth. The availability of increased resources has seeped into the lives of both the rural and urban population, thus elevating their lifestyle. Notably, increased availability of funding has brought in significant changes in the lives of senior citizens. One such financing option is a reverse mortgage, which allows retired individuals to live with financial independence.
With the increasing popularity of this mortgage type, senior citizens can spend their retired life with an assurance of security. Such a loan allows you to receive cash flow regularly against your residential property’s mortgage. While reverse mortgage loan is a unique source of financing, it is essential to know a few things about it. This will ensure you make an informed decision when applying for the same and also receive it with the most beneficial features, terms and conditions.
Alternatively, a retired individual can also opt for a traditional mortgage advance as a loan against property by meeting simple eligibility criteria and documents. Now, let’s check out the things you should know about credit through reverse mortgaging.
Things To Know About A Reverse Mortgage
- Eligibility Criteria For The Loan
The eligibility to avail a loan through reverse mortgaging is simple. You need to meet the following criteria to avail this loan.
- You should be an individual above 60 years of age.
- You must own residential property.
- Ownership of the property should be permanent and at least 20 years old.
Meeting these criteria, you can conveniently secure finance for your retired life. Other convenient financing sources for retired individuals are mortgage loans like loan against property. The credit is available with attractive features and benefits along with lower rates of interest. Thus, you can readily pay easy EMIs with the pension received or through any other income. Financial institutions like Bajaj Finserv are the most preferred loan against property lenders in India.
They also bring pre-approved offers that make financing easy and convenient for you. These offers are available on home loans, business loans, personal loans, as well as multiple other financial products.
- Working Of A Loan Through Reverse Mortgaging
The working of a reverse mortgage is different from traditional mortgages. On reverse mortgaging your property with the lender, you receive the loan amount every month or in a lump sum, as you require. The monthly payment is received until the time any primary borrower continues to live in the house as his/her primary residence.
However, the loan does not come with a repayment liability as loan recovery is only initiated after the primary borrower ceases to live in the house. Reverse mortgage loan in India has thus gained popularity as it is convenient to avail, provides periodic finance and comes without any hassle of repayment.
If you seek finance which you can repay in EMIs and regain your right to the residential property on full repayment, loan against property comes off as the best option with financing of up to Rs. 3.5 Crore.
- Applicable Interest, Fees And Charges
Top reverse mortgage in India comes without any hassle of repayment. Therefore, it does not attract any interest charges. However, it comes with a few one-time charges like processing fees, origination fees, etc.
When availing the loan, you may, however, compare these charges with that of other borrowing options with similar benefits. For instance, charges of loan against property are both competitive and affordable.
- Flexibility of End-use
Reverse mortgage schemes come with the flexibility of end-user. It means you can utilise the loan amount to meet your diverse financial requirements after retirement.
For example, you can use the amount received to fund your travel abroad, meet medical emergencies, or any other purpose.
Additional Read: How Reverse Mortgage Boon For Senior Citizen?
With all the necessary information at hand, you may now make an informed decision when planning to avail loan on a reverse mortgage. Financial security post retirement requires such a monetary back up. With loan options like loan against property, you can also effectively match your financial requirements.