The scheme of reverse mortgage has been introduced for the benefit of senior citizens owning a house but having inadequate income to meet their needs. Some important features of reverse mortgage are:
a) A homeowner who is above 60 years of age is eligible for reverse mortgage loan. If a couple is opting for the loan jointly, one of them should be a senior citizen and the other at least 55 years old.
b) NO REPAYMENT is required as long as the borrower lives, Borrower should pay all taxes relating to the house and maintain the property as his primary residence.It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker.
c) The amount of loan is based on several factors:
- Borrower’s age,
- Value of the property
- Current interest rates and
- The specific plan chosen.
d) The property should be clear from encumbrances and should have clear title of the borrower.
As per the scheme formulated by National Housing Bank (NHB),the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy.
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