Reverse
mortgage is an effective tool that is popular among Western countries like
United States. In India it was introduced 7-8 years ago but failed to pick up
as it was expected.
What Reverse Mortgage is?
It
is a peculiar type of loan that can be availed against home. It allows the
borrower to convert an equity portion of property to cash. Reverse mortgage
allows the borrower to get a regular income for his or her self occupied home. It
is specifically beneficial for the retirees or the senior citizens. When an
individual mortgages its house to finance institute then he is likely to get a
particular lump sum amount periodically at defined interest rate. The tenure is
generally 15-20 years. After completion of tenure borrower has either to repay
the loan amount or the institute will compensate it by selling the house.
Eligibility
To
avail traditional mortgage, the borrower has to show enough income versus debt
ratio and should be able to make monthly payments towards mortgage. On the
other hand in case of reverse mortgage, borrower gets the payment regardless of
the income or asset. Borrower’s age, interest rate, loan fees and escalated
value of the property are the key considerations in reverse mortgage. It does
not even require the credit history of the borrower as the property itself is
mortgaged.
Why it failed in India?
Despite
its acceptability over worldwide and so many advantages, it did not manage to
attract the Indian market due to several reasons. Home is considered as a
family asset in India. Moreover the loan amount that can be sanctioned is
Rupees 50 Lakhs to 1 Crore which seems not so lucrative for those living in the
core of cities with the asset of value Rupees 1.5 Crore to 3 Crore. Structure
is another reason for its failure. It is not liable for lifetime income. Hence it failed to captive Indian market.
HDFC Mortgage is the ladder to realize your dreams without
being burdensome. Its loan products are available at lucrative interest rates
and hassle free documentation.
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