Reverse Mortgage

What are the eligibility criteria for availing an RML?

Can an RML be availed against property being used for commercial purposes?

No, commercial property is not eligible for availing RML.

What is the amount of money a house owner can get under an RML?

The amount of loan available under RML depends on the age of the borrower, appraised value of the house and the prevalent interest rates of the lending institution.

Are there any ceilings on the amount of monthly/ lump-sum payments to be received by an RML borrower?

Yes, the maximum monthly payments under RML have been capped at Rs.50, 000. The maximum lump-sum payment shall be restricted to 50% of the total eligible amount of loan subject to a cap of Rs.15 lakh, to be used for medical treatment for self, spouse and dependants, if any. The balance loan amount would be eligible for periodic payments.

Is the payment received by a borrower under an RML subject to income tax?

All payments under RML shall be exempt from income tax under Section 10(43) of the Income-tax Act, 1961.

What shall be the tenure of an RML?

The maximum tenure of an RML will be 20 years. To understand the tax implications against your reverse mortgage income/loan, Call us on 080 67974000 and ask our experts!

How is the loan paid?

With a reverse home mortgage, no payments are made during the life of the borrower. Since no payments are made during the term of the reverse home mortgage loan, the loan balance rises over time. In most areas where appreciation is good, the value of the home grows at a much faster rate than the loan balance. Therefore, the remaining equity continues to grow. When the last borrower passes, or it is decided to sell the home and move, the loan becomes due. The ownership of the home is then passed to the estate or directed by a living will or will to the beneficiaries.

What happens after the death of one or both of the spouses?

If one of the spouses dies, the other can still continue living in the house. If both die, the bank will give their heirs two options -- settle the overall outstanding loan and retain the house, or the bank will sell the house, use the proceeds to settle the outstanding loan and give the rest to the heirs.

How much of an annuity income can my house generate using reverse mortgage?

The banks have so far not indicated the interest rates. However, we can safely assume that it will not exceed the interest rates used for loan against property -- which is currently in the region of 12 per cent to 14 per cent.

Does a person's age affect the amount of annuity paid?

It certainly does. Higher the age, higher the annuity! Everything else remains the same. Call us on 080 67974000 and learn more about reverse mortgage!

Advantages of Reverse Mortgage