If you are a senior citizen then you are most likely to know about the reverse mortgage loan in India, which is a type of loan against property, where your residential home is pledged as collateral. This scheme is beneficial when you need money in instalments or a lump sum amount to finance your retirement years. It requires you to return the amount borrowed either when you sell or move out of your pledged property or by your heirs after your demise. The amount that is offered to you by lenders can be used to address a variety of needs such as day-to-day living, medical emergencies and more. A reverse mortgage loan, however, usually cannot be used for investments or to finance a business idea as per most lenders’ terms in India.
A reverse mortgage scheme is lucrative for senior citizens to remain financially independent and you can also avail a reverse mortgage loan enabled annuity in which your lender pays a certain amount towards an insurance company to purchase annuities in your name. This transaction can be automated from your lender to your insurance company to save you the hassle.
Rise of the reverse mortgage lending limit in the US
In the USA, the Department of Housing and Urban Development increased the maximum claim amount from $679,100 in 2018 to $726,525 in the year 2019. This places borrowers in an advantageous position with an increased amount at their disposal. For senior homeowners in the US, this brings about an increased amount of freedom and ability to increase the standard of living.
Will the reverse mortgage loan limit rise in 2019 in India?
There is still much speculation about the rise in the lending limit in India for a reverse mortgage loan in 2019 as this type of loan is still new and has not yet gained popularity in the market. What is certain however is that housing credit is increasing to India to reach a growth rate of 19% in 2019. This may also increase the offers on the reverse mortgage scheme.
Additional Read: Reverse Mortgage: Direct Benefit for Senior Citizens on LAP
Benefits of reverse mortgage loans in India
Up until now, the maximum loan amount for a reverse mortgage loan in India is Rs.1 crore. You can use this amount to meet your daily expenses and other financial responsibilities. One of the perks of this loan is that the loan amount is free from taxes and is not treated as capital gains; however, if you sell the home to pay off the loans, taxes are applicable on the sale.
As a senior citizen, you can also access a maximum lump sum payout of Rs.15 lakh via this loan in the event you need the money to address a medical emergency. The greatest benefit of this loan is that the amount does not need to be paid back until the home is sold or vacated or when the borrower passes away. The benefit of a reverse mortgage loan is best enjoyed when clubbed with multiple sources of income to give you access to an increased amount of funds.
While this may be a good source of post-retirement funds, keep in mind that your heirs will need to repay the loan within 6 months upon your demise to retain home ownership. If you have an attachment to your property and have the funds to make monthly repayment, you can opt for a Loan Against Property with Bajaj Finserv that offers you an amount up to Rs.5 crore. You can also consider the lease rental discounting feature that allows you to borrow a lump sum amount on a property that you have given on rent to meet your current expenses. With minimal documentation and an easy online management system, you can manage your loan from the comfort of your home. To get started, receive a customized offer that makes borrowing funds stress-free.