What is a reverse mortgage
facility and how does it works?
A reverse mortgage is a special
type of loan that allows the borrower to monetize the value of his property. It
could work in two ways – the mortgagee can get either a lump sum or a certain
fixed amount each month against the pledge of his property. There is no
repayment required during the lifetime of the borrower. The loan provider will
auction the property upon the death of the borrower and apply the proceeds
against the loan.
Who should go in for a reverse
mortgage and at what stage? Why?
A reverse mortgage is typically
availed by senior citizens who which to convert their real estate assets into
immediate liquidity. This could be for medical/living expenses or to supplement
their pensions.
What are the aspects of reverse
mortgage that need to be considered before opting for it?
The borrower should consider
the implied interest rates, tenure and the loan amount available against his
property while applying for a reverse mortgage.
Can one take a reverse mortgage
and then at a later stage pay the amount and regain ownership?
Yes, it is possible to pay a
lump sum amount after availing a reverse mortgage. The exact amount and
conditions would vary depending on the specific facility availed.
