In India, one of the prime apprehensions for people approaching old age is financial support. This worry gets intensified with the increase in cost of living due to rising inflation. Inflation inevitably reduces the purchasing power of consumers, and inflation is the one of the greatest factors that leads to real income erosion. Inflation affects basic necessities such as cost of living, healthcare, etc. Combining this with irregular income and shrinking capacity to work can easily create anxiety for someone who is getting old. So, how can you get a regular income during your golden years? A constant inflow of income without work seems to be an ideal solution to avoid this potential problem.
Is this possible? Indeed, yes! One of the solutions is the Reverse Mortgage Scheme. This was initially perceived as an option to assist people approaching old age. This scheme is offered by several leading banks in India for senior citizens. A reverse mortgage loan can be seen as an anti-home loan i.e. reverse of home loan. In regular home loan, you borrow funds to buy a house and repay the lender on a monthly basis i.e. EMI. As the name suggests in the case of a reverse mortgage, the lender becomes the borrower. The owner of the property i.e. you can continue to make use of the property without any change.
The way a reverse mortgage loan works is that it allows an elderly person (borrower) who is the owner of the house to convert his house equity into loan in the form of cash part by part i.e. senior citizens or elderly persons can use their self-occupied residential property as collateral so that they can receive a monthly income over a specific period of time. The borrower or elderly person can continue to stay in his or her house until death, sale of the house property or until he or she moves out permanently.
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