By the year 2013, approximately Rs.1800 crore was sanctioned as reverse mortgage loans in India. The said scheme has been designed to cater to the financial requirements of senior citizens. Borrowers can benefit under this scheme by mortgaging their residential property to the lender and availing monthly income instead of repaying monthly instalments.
The following list highlights the benefits of reverse mortgage –
Zero restrictions on end-use – By opting for a reverse mortgage, individuals are entitled to avail lump sum funds as a monthly payout. The money thus availed can be used to meet monetary needs without any end-use restriction.
Tax savings – Since reverse mortgages are considered loan advances; it is not treated as accrued income. This is why the payouts received by the borrowers are not subjected to taxation.
Convenient repayment option – Borrowers are not required to repay a portion of their loan amount every month. They are only required to repay the loan value once they decide to sell the property under question or move out of it. Also, irrespective of the amount availed as loan; borrowers have to repay funds equivalent to the mortgaged property’s prevailing market value.
Easy to meet criteria – Individuals, who are at least 60 years of age and have possession of the property for a minimum of 20 years, are deemed eligible for this loan option. Additionally, individuals are required to submit basic KYC documents and financial statements to complete the application process quickly.
Contrarily, individuals who wish to avail a substantial loan value against their residential property may apply for a loan against property to fund their immediate financial requirements. Besides the easy to pay loan against property interest rate, the repayment options accompanying the credit option is also quite convenient.
The following list highlights the benefits of reverse mortgage –
Zero restrictions on end-use – By opting for a reverse mortgage, individuals are entitled to avail lump sum funds as a monthly payout. The money thus availed can be used to meet monetary needs without any end-use restriction.
Tax savings – Since reverse mortgages are considered loan advances; it is not treated as accrued income. This is why the payouts received by the borrowers are not subjected to taxation.
Convenient repayment option – Borrowers are not required to repay a portion of their loan amount every month. They are only required to repay the loan value once they decide to sell the property under question or move out of it. Also, irrespective of the amount availed as loan; borrowers have to repay funds equivalent to the mortgaged property’s prevailing market value.
Easy to meet criteria – Individuals, who are at least 60 years of age and have possession of the property for a minimum of 20 years, are deemed eligible for this loan option. Additionally, individuals are required to submit basic KYC documents and financial statements to complete the application process quickly.
Contrarily, individuals who wish to avail a substantial loan value against their residential property may apply for a loan against property to fund their immediate financial requirements. Besides the easy to pay loan against property interest rate, the repayment options accompanying the credit option is also quite convenient.
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