65-year old Sujit Sharma has lived in his independent home in Oundh in Pune for more than 40 years. When his only daughter got married a couple of years back, Sharma and his wife found it difficult to cope with mounting medical expenditures at their advancing age. Mrs Sharma has a heart condition and suffers from diabetes.
Mr Sharma draws a meagre pension of ₹30,000 that is barely enough to meet his monthly expenses. The proud and upright man that he is, Mr Sharma would never ask his daughter for monetary assistance, though she has repeatedly offered to help.
Once when lost in thoughts he was on his evening stroll he happened to share his woes with Ajay Bodke, his friend for the last three decades. Bodke shared that he too like Sharma was in a comparable situation not so very long ago, till his banker suggested a reverse mortgage variant of an ICICI Home loan to him, that Mr Bodke thinks brought about a transformation in his life.
A supplemental source of income for a senior citizen
Mr Bodke explained to his friend that this is the exact opposite of conventional home loan that is designed for senior citizens. In this loan, a borrower, (a senior citizen) can avail of the option to pledge a self-owned property to a bank and receive a periodic payment against it for a specified time. This acts a supplemental source of income in one’s advancing years. A reverse mortgage loan is an ideal solution for senior citizens as mostly all senior citizens unlike the current generation have put in the savings of a lifetime to build their houses.
When the borrower pledges his property, the lender arrives at its value depending upon the condition of that perticular property, its location and demand for the property in comparison of the current property prices. Another factor that goes in the credit assessment of the borrower is his CIBIL rating. A score of 750(out of 900) and above is considered satisfactory. A good credit score is a prerequisite for any line of credit and a reverse mortgage loan is no exception.
The other eligibility criteria for a reverse mortgage loans are as follows:
How does it work?
Based on the lender’s assessment of your CIBIL rating, interest costs and price fluctuations, a quantum of payment is decided upon. This is called the “reverse EMI” that you receive over a fixed tenure. The payment can be received monthly or quarterly as per your requirement. Also, in every of these schemes, a property re-evaluation happens every five years. In case the value of your property appreciates in this time frame, you can revise the terms of the loan and increase the loan amount.
Easy settlement terms
The best and hassle-free part about a reverse mortgage product of ICICI Home Loan and other lenders is that you can continue to live in the property premises as usual, even after the this mortgage scheme come into play. The loan comes up for payment only when the borrower/co-applicant who was surviving last, expires. The lender, then approaches the next nominee (usually the children) to settle the loan without selling the property.
If he or she is unable or unwilling to settle it, the lender recovers its dues by the sale of that property. The extra amount after the settlement of the loan is passed on the legal heir or heirs of the borrower. If the borrower or one of the spouses outlives the tenure of the loan, he or she can continue living in the premises without any worries and the settlement is only done after his/her death.
To conclude, here are some advantages of a reverse mortgage loan that you can consider:
Therefore, if you have your own property and are struggling with your finances in your sunset years, a reverse mortgage product may be worth a consideration.
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