What is Reverse Mortgage?
This term refers to a loan sanctioned to elderly citizens by changing house property equity to an income. According to the scheme, senior citizens can pledge their property (the house) to any of the lenders which usually is HFC or scheduled bank with an expectation of a return of a certain amount. Instead of a one-time payment, they can opt for periodic payments during the life time of the borrower. The owner of the home does not have to worry about repaying the loan.
Do the Family Members Have to Leave the House with a Reverse Mortgage?
If the borrower of reverse mortgage passes away or leaves the house permanently, the loan has to be repaid along with interest. This is obtained through the sale of the property. If there is any additional amount, it would be paid to the heirs of the borrower. During the life time of the borrower, he can enjoy staying in the home even after the expiry of loan tenure. However, the heirs of the borrower cannot stay in the house once it has been sold out. They will only be provided with extra amount if any.
Also, the family members have the option of buying the home from the lender by paying the required amount. In that case, they can stay in the house. If the heirs of reverse mortgage taker are not interested in buying the house, the lenders will sell the home and settle the amount.
Also, during the tenure of loan, the ownership of the house would be in the borrower’s name which is another feature that attracts senior citizens towards the idea.
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