In a regular mortgage loan, the borrower gets a lump-sum amount against a given property like a home. The borrower then pays the borrowed amount back to the lender in Equated Monthly Installments or EMIs. However, in a reverse mortgage, the opposite is true.

A reverse mortgage loan is a unique type of loan in which a borrower, usually a senior citizen only, can mortgage a property he or she already owns to a bank. The bank then pays a monthly amount to the borrower for the specified tenure. Since it is the bank paying the EMIs to the borrower in this loan, it is called a reverse mortgage.

What is reverse mortgage?

A reverse mortgage is a great way for senior citizens to receive some funds if they’re short of liquid cash and they have a property in their name. Using their already owned property as a mortgage, the senior citizens can borrow money from a bank which is paid via monthly installments by the bank.

Who is eligible for reverse mortgage?

All senior citizens of India above the age of 60 years who own a residential property can avail this loan. The residential property should be in the borrower’s name, either fully, or jointly with their spouse.

How is a reverse mortgage paid back?

In case of a regular mortgage, the borrower needs to start paying back the loan amount immediately via EMIs. In reverse mortgages, no amount is paid back during the tenure period. The amount is to be paid only if the borrower moves out of the home or decides to sell the house. So, how does a reverse mortgage work when you die? If the borrower dies, the house is transferred to the legal heir, who can pay the loan amount. If the loan is unpaid, the bank can auction the house.

Loan Tenure

In India, the loan tenure for a reverse mortgage is anywhere between 10 to 15 years depending on the bank and the age of the borrower.

Loan Amount

The minimum loan amount one can avail for a reverse mortgage is Rs. 3 lakh, while the maximum amount stands at Rs. 1 crore. The maximum loan sanctioned for a reverse mortgage is about 60% of the total value of the residential property.

Final Word

Thus, a reverse mortgage is a unique and useful way for the senior citizens of India to make sure that they get enough regular funds for their day to day needs. The elderly can find themselves short of cash due to the lack of a regular income. But if they have a residential property in their name, they can make use of the same in a reverse mortgage for some much-needed liquid funds.

Learn more about your Home Loan Eligibility here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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