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  • Reverse Mortgage: BY, Abinesh, Dhruv, Radhika, Rahul, Yash Vardhan

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    Abinesh
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    A reverse mortgage allows homeowners aged 60 or older to convert part of the equity in their home into tax-free cash without having to sell the home or take on monthly mortgage payments. The lender provides loan amounts based on the home value and age of the borrower, up to a maximum of Rs. 1 crore. The borrower can continue living in the home for the rest of their life. However, reverse mortgages have low loan-to-value ratios, income stops after the loan term ends, and the process requires lengthy documentation. There is also lack of awareness about reverse mortgages among people.

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    Reverse mortgage

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    A reverse mortgage allows homeowners aged 60 or older to convert part of the equity in their home into tax-free cash without having to sell the home or take on monthly mortgage payments. The lender provides loan amounts based on the home value and age of the borrower, up to a maximum of Rs. 1 crore. The borrower can continue living in the home for the rest of their life. However, reverse mortgages have low loan-to-value ratios, income stops after the loan term ends, and the process requires lengthy documentation. There is also lack of awareness about reverse mortgages among people.

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    4 views11 pages

    Reverse Mortgage: BY, Abinesh, Dhruv, Radhika, Rahul, Yash Vardhan

    Uploaded by

    Abinesh
    A reverse mortgage allows homeowners aged 60 or older to convert part of the equity in their home into tax-free cash without having to sell the home or take on monthly mortgage payments. The lender provides loan amounts based on the home value and age of the borrower, up to a maximum of Rs. 1 crore. The borrower can continue living in the home for the rest of their life. However, reverse mortgages have low loan-to-value ratios, income stops after the loan term ends, and the process requires lengthy documentation. There is also lack of awareness about reverse mortgages among people.

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    © All Rights Reserved
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    of 11

    6.

    53

    REVERSE
    MORTGAGE
    BY,
    ABINESH, DHRUV, RADHIKA, RAHUL, YASH VARDHAN
    CONTENTS

    Introduction Eligibility How it works?

    Benefits Problem
    MORTGAGE
    • Mortgage loans are used to buy a
    home or to borrow money
    against the value of a home you
    already own.
    • The borrower repays the loan
    plus interest over a specified
    number of years until they own
    the property free and clear. 
    • If the borrower stops paying the
    mortgage, the lender
    can foreclose on the property.
    REVERSE
    MORTGAGE
    • The loans are typically
    promoted to older
    homeowners and typically
    do not require monthly
    mortgage payments.
    • They can mortgage their
    owned residential
    property as collateral
    • Launched in 2007
    ELIGIBILITY

    • A reverse mortgage is available to anybody over the age of 60. In case a


    couple wishes to opt for one, the age of spouse should be more than 58
    years.
    • The borrower must have a fully owned house. In case of a couple, at
    least one of them must own a house.
    • The property must have been in existence for at least 20 years.
    • Properties that are let out or being used for commercial uses are not
    eligible.
    HOW IT WORKS?
    • Based on the value of your house and its location, the bank will decide
    how much loan to give you.
    • Maximum loan amount most banks offer is Rs 1 crore, even if your
    property is worth much more.
    • The maximum period of the loan offered is 10-20 years.
    • Bank typically revalues your property once in about five years
    BENEFITS

    • The income the borrower receives


    from the bank will be tax free
    under Section 10(43) of the
    Income Tax Act, 1961
    • After the loan tenure you can still
    stay in the property
    • Home repair expenses eligible for
    deduction
    PROBLEM
    • You are paid less even if your
    property is currently valued more
    • Loan to Value (LTV) Ratio is Low
    • What happens about the income
    after 20 years?
    • Lengthy documentation is.
    Usually required in order to avail
    a reverse mortgage.
    WHY IT IS NOT
    PREVALENT?
    • Lack of awareness among
    the people because banks
    aren’t popularizing it
    • The scheme is also
    perceived to be
    complicated to understand
    • Emotional bonding towards
    the home
    THANK YOU

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