Consumer Voice - - Bfsi / Reverse Mortgage Loans -

Who is el­i­gi­ble? 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 as mu­tu­ally agreed to by the bor­rower and the banker. The prop­erty should be clear from en­cum­brances and should have clear ti­tle of the bor­rower. What about re­pay­ment? No re­pay­ment is re­quired as long as the bor­rower lives. Bor­rower should pay all taxes re­lat­ing to the house and main­tain the prop­erty as his pri­mary res­i­dence. What about amount el­i­gi­bil­ity? The amount of loan is based on sev­eral fac­tors: bor­rower’s age, value of the prop­erty, cur­rent in­ter­est rates, and the spe­cific plan cho­sen. Gen­er­ally speak­ing, the higher the age, the higher the value of the home, and the more money is avail­able. 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. Mar­ried cou­ples will be el­i­gi­ble as joint bor­row­ers for fi­nan­cial as­sis­tance. In such a case, the age cri­te­ria for the cou­ple would be at the dis­cre­tion of the lend­ing in­sti­tu­tion, sub­ject to at least one of them be­ing above 60 years of age. How is re­pay­ment of an­nu­ity/loan done on death? 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 will be used to re­pay the mort­gage, with the re­main­der go­ing to the heirs.

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