Maximum Reverse MortgageMax reverse mortgage
Seniors who own real estate in their name but cannot cash in can use this system every months as a steady revenue stream. This system was implemented by the federal authorities in the 2007-2008 Union budget. The programme allows an elderly person who does not have a steady income but does own a real estate to pledge it to a house financing institution (HFC) or local savings institution and receive a steady loan for it.
And the best part is that the individual can remain in the home for the remainder of their lives and also receives periodic payments. Should the individual die or leave the home, the bank reserves the right to resell the home in order to get the credit back. So the maximum amount of money you can get is up to 60% of the value of the home and the maximum term of the mortgage is 15 years.
This system so far seems very encouraging, but there are some possible drawbacks that we need to consider before tackling it. Considering that under reverse mortgage program, you will receive some amount each month from the savings banks for fulfilling your everyday spending, but what if you need some sudden large amount for any emergencies.
Let us look at the case of Mr Motwani, 62 years old, who has a home valued at 80 rupees and no longer has a means of subsistence. They apply for a reverse mortgage program and receive a certain amount as periodic payments from the banka. He will not be paid a flat-rate amount by the banks for his treatments, nor will he be able to resell his home as it is pledged to the them.
Therefore, it will be wise for everyone to first insure themselves and their spouses sufficiently against serious illnesses and medical expenses before choosing the system. Reversing mortgage can not be a very viable option in the case of seniors with familial conflicts, mostly with their kids, who do not allow them to resell the home even if it is an established home.
Older folks who have lived most of their lives repaying their home loans will find it very difficult to take on another mortgage and keep their home on mortgage. Also, the closing and maintenance cost associated with the programme is very high, so it is only advised when a long-term pension is needed.
Therefore, before you actually "reverse mortgage" your home, thoroughly assess the advantages and disadvantages of it. Whilst all due diligence is exercised by IRIS to warrant the timeliness and correctness of the contents provided by it, neither it nor its affiliated companies or their officers, agents, employees and/or contractors are in any way directly or indirectly held accountable or answerable for any error, inaccuracy or discrepancy in the contents provided by it or for any decision or action taken as a result of the contents,
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