Mrs. Sharma is a
62 yrs old widow living all by herself in a house built by her husband but the
pension that she gets is not enough to bear her livelihood expenses and she
hates to ask for the financial help from her children. Getting into old age
without proper financial support can be a very bad experience. The rising cost
of living, healthcare, other amenities compound the problem significantly. No
regular incomes, a dwindling capacity to work and earn livelihood at this age
can make life miserable. A constant inflow of income, without any work would be
an ideal solution, which can put an end to all such sufferings. But is it
possible?
According to Oasis (Old Age Social and Income
Security Project) report, only 4% Indians are financially independent at the
age of 60; and 90% of our senior citizens live in poverty. Old age can be very
challenging or rather miserable when there is no support from any source.
I strongly
believe that creating a nest egg for a comfortable retirement is absolutely
necessary and sooner one starts better it is; however, the fact is some people
think everything will ‘just turn out ok’ and they make no concentrated effort
towards planning for their retirement. On the other hand, it may not be a
feasible thing to do for many; who have other loads of expenses. Does it mean one should lead a life of penury
and be a popper in the sunset years? No certainly not. Reverse mortgage is the
silver lining in the dark cloud; and is especially useful if one has not saved
enough for the retirement and for people who are brick rich but cash poor.
If you are
looking for a regular tax free source of regular income after retirement you
don’t have to look beyond the four walls of your house. Reverse mortgaging your
house can get you a regular income in your old age. Banks are willing to give
loans against property to senior citizens. In return, the bank becomes a part
owner of the house. In this way, cash-strapped senior citizens can unlock the
value of their property without actually selling it.Though the
concept is very common in developed markets, reverse mortgage has not picked up
in our country where real estate also has an emotional value. People love their
homes so much that they cannot bear the thought of selling the property.
It's time to get rid of this misconception about reverse mortgage. If an owner
puts up his house for reverse mortgage, it does not mean he has sold it. He has
merely taken a loan against it. The property is revalued every five years, and one
can expect a higher income after the revaluation of the property as and when
the value appreciates. After his death, his legal heirs will have the option to
either repay the loan along with the interest and regain the property or let
the bank sell it and give them the proceeds after deducting the borrowed
amount.
This is how
reverse mortgage works:
It’s opposite of
home loan; instead of paying the EMI the person gets the lump sum or monthly / quarterly / annually pay out from
the Bank. The lump sum can be deposited in the borrower’s bank account and can
be withdrawn as per requirement. The owner can borrow up to 60% of the value of
the property; and since money received is a loan, its tax free. And the
property is revalued every five years; one can expect a higher income after the
revaluation of the property.
After owner’s
death his heirs will have the option to repay the loan along with the interest
and regain the property or let the bank sell it and give them the proceeds
after deducting the borrowed amount. Only senior citizens can avail of reverse
mortgage and they should be living in the house that is being mortgaged. Don’t
compromise on the quality of life. Stay Happy!! Stay Blessed!!
