Monday, 3 October 2011

Reverse Mortgage brings Money for Senior Citizen

Reverse Mortgage is a method of bringing money to senior citizens to survive without others help.  Through Reverse Mortgage, banks give money to senior citizens by converting their fixed assets such as house property, Land etc. In terms of bank they allow loan to senior citizens by mortgaging their equities (fixed assets which has no any other claim or liability).

Reverse Mortgage is an agreement between the senior citizen (Borrower) and the lender (Bank). The borrower is supposed to pledge his property which has no any other claim (liability) and the bank allows loan in a lump sum or regular payment over a period of time or the life span of the borrower. The borrower can avail money periodically throughout his or her life, or a lump sum payment.

The borrower should not pay off the loan in his or her life time and the property will be with the borrower and he can enjoy the full right of the property and any income from the same, if any. The borrower can spend the money as he or she like and the borrower should not mention any particular purpose.

When the borrower dies the property will be sold by the bank (lender) and the principal amount along with interest will be kept by the bank and the left over will be given to the legal hires of the borrower. (Normally after the death of the borrower the lending institution approaches the legal hires to pay off the principal amount and interest.  If they could not pay off the same the lenders will sell off the property) If the sale proceeds are less than the principal amount and interest, the borrower will suffer the loss. (Normally the bank will not lend more than the expected value of property)

The borrower can make free their property any time by paying the amount withdrawn and the interest thereof to the lender.

Reverse mortgage is helpful to senior citizen those who have no income and normally banks will not give any loan to them in consideration that they could not pay off the loan. But if they have any house property or such fixed assets they can go for a reverse mortgage and can enjoy a lifetime income without selling off their property and they can enjoy the full right of the property till their death.

This is helpful for senior citizens those who have nobody to look after their financial needs. This reverse mortgage can be in joint name also with his or her spouse.

The reverse mortgage is popular in United Kingdom and U.S.A and now it is being popular in India also. In India the reverse mortgage is available in Dewan Housing Finance, State Bank of India, Punjab National Bank, Bank of Baroda, Central Bank of India, Union Bank of India, LlC Housing Finance, Indian Bank, Andhra Bank, Corporation Bank and Canara Bank.

Bank gives the payment for minimum 10 years and maximum 15 years and some banks in India allows another extension also as per the value of the property pledged. If borrower is still alive even after the payment term the bank will allow the borrower to stay in the house till his or her death and only after the death they will settle the loan amount.

Normally after the death of the borrower the lending institution approach the legal hires of the borrower to pay off the principal amount and interest.  If they could not pay off the same This Reverse mortgage is a good method of getting benefits of your home or fixed assets by retaining the ownership and also without making any repayments. This is a good solution for the financial needs of senior citizen after retirement and helps them in regaining their feeling of independence. The minimum age of availing reverse mortgage is 60 years and in joint name the wife should have at least 58 years of age.

Reverse mortgage is suitable for the old age retired people who do not have any income to survive and have a house property their own and nobody is there to look after their financial needs.

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