Meant especially for the elderly who have limited cash supply even though they own a high-value property, reverse mortgage loans were introduced in India in the year 2007.
Even though these loans essentially grant financing against the mortgage of a property like a loan against property products, these are quite unique in its features.
Only individuals above the age of 60 years can apply for these loans by mortgaging a property which they owned for at least 20 years. It is essential for potential customers to know the myths and truths behind them before opting for a reverse mortgage loan in India.
- Repayment Difficulties: There is no clause under this loan scheme which dictates that customers have to repay their borrowed amount when their tenor ends. Pensioners availing such credit are not legally required to repay the debt; the lender may auction the property to collect the due amount, or the borrower’s next of kin can pay the debt to acquire the property.
- Selling Of Property Is Not Allowed: Borrowers are not allowed to sell their property after they have availed a reverse mortgage scheme. If the need arises in this case, they have to clear their loan account dues before they can access the rest of the selling revenue.
- Renting Out Of Property: Any borrower who intends to rent out their property while a reverse mortgage is in effect cannot do the same. For the duration, while a property is tied to a financial institution as an asset, it cannot be used to generate any revenue.
One of many reasons for low popularity of reverse mortgage India is the prevalent myths discussed above. Potential borrowers should check the features in details to be further assured.
Additional Read: How Can One get a Mortgage Loan at a Low-Interest Rates?
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