Retirement Planning – 6 – Reverse Mortgage

By | 24/09/2016

The most significant thing for people planning their retirement is to get a stable stream of cash to substitute the salary something that would cease to come post-retirement. For people not getting a Pension, this is an even bigger worry. For this you require to make a large upfront deposit to make the monthly income. What if you don’t have this huge amount of cash? Over your working life, you would have accumulated various assets – like house, gold, etc. One option is to sell some of these assets, and invest the amount thus obtained in the fixed income instruments. But if you sell these assets, you can no longer use them. For example, if you sell your house you would have to live in a rented house. This means that you don’t just have to live in a new place, but you also increase your monthly expense due to the rent. You would have to earn that much more interest every month in your retirement!
Is there any way you can utilize your assets while still owning and using them? Yes, that is reverse mortgage.

Reverse Mortage in India still at an infancy stage. The reverse mortgage came into life in the UK during the crash of 1929. Having evolved genetically from the developed countries and generally the USA, reverse mortgage is a plan formulated to benefit the senior citizens the most. Reverse mortgage Loan Products for senior citizens are the basic that every bank or financial institution follows.

Be very specific, Reverse mortgage is a Home Loan product planned for the senior citizens by converting their equity in any house belongings into an income channel without having to liquidate your equity in case of any requirement.

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Things to know about Reverse mortgage

The Dealing Parties

Reverse mortgage loan involves two parties; • The borrower – A senior citizen • The lender – Any bank or housing finance institution

Security for the Lender

The borrower pledge their home property to a lender. Borrower of a Reverse Mortage doesn’t have to keep anything as a security with the Lender apart from the Home property.

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