Reverse Mortgage Loan

Reverse Mortgage Loan (RML) enables a Senior Citizen above 60 years age in India. The idea is to avail of periodical payments/ lump sum amount from a lender against the mortgage of his/her house. Such a loan allows the borrower to continue to occupy his house as long as he lives. Unlike other loans, reverse mortgage need not be repaid by the borrower. The maximum period of the loan (over which the payments can be made to the reverse mortgage borrower) is 20 years. The lender on the other hand has to value the property periodically at least once in five years and the quantum of loan may be revised based on such re-valuation of property at the discretion of the lender.  On the borrower’s death or on the borrower leaving the house property permanently, the loan is repaid along with accumulated interest, through sale of the house property. The borrowers or their heirs also have the option of prepaying the loan at any time during the loan tenor or later, without any prepayment levy. In the usual mortgage, as the regular mortgage payments are made the outstanding loan decreases and the house equity increases. Reverse is the case in reverse mortgage, the loan amount increases with time and the home equity decreases with time.

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