What Are the Interest Rates and Loan Tenure? You do not have to pay anything (ever) to the bank under this arrangement. However, you can continue to live in the house so long as you are alive. At the end of the fixed period, the bank simply stops making the payment. Please understand that even though the bank makes the payment for a fixed number of years, it does not get your house at the end of the fixed period. Any excess realized amount will be given to your nominee/legal heir. It can sell the house to recover the amount paid to you. Essentially, after your demise, the bank gets possession of your house. Why does the bank do that? Well, it gets your house when you are not around. Or rather the bank disburses the loan in monthly instalments over a fixed period. Instead, the bank pays you the EMI every month for a fixed number of years. In case of reverse mortgage loans, you do not pay any EMI to the bank. Under other variants of loans, you get a lumpsum amount from the bank and you pay the EMI to repay your loan over the loan tenure. Reverse Mortgage Loans work in a very different way as compared to other loans. You can’t take out a reverse mortgage loan on a let-out property. ![]() The borrowers must stay in that residential property.However, one of the applicants should be 60 while the spouse’s age should not be less than 58 years. Joint borrowing with spouse is permitted.Minimum Age: 60 years in case of a single borrower.Loan Tenure: 10-15 years (even though regulations allow a maximum tenure of 20 years).SBI Reverse Mortgage Loan: Eligibility and Features I will consider Reverse Mortgage Loan Product from State Bank of India for illustrations. In this post, I will look at the aspects that you must consider while finalizing a Reverse Mortgage Loan product. I have discussed Reverse Mortgage loans in detail in another post. You can monetize your residential property and generate income while continuing to retain the ownership so long as you are alive. Senior citizens reverse mortgage loan borrowers can opt for monthly, quarterly, half-yearly, yearly or lump sum payout.A Reverse Mortgage Loan (RML) can provide a useful income stream for senior citizens during their retirement. Senior citizens can prepay their reverse mortgage loan without attracting penalties. The current rate of interest on the SBI Reverse Mortgage Loan is 10.95%. Post sanction, the borrower has to pay stamp duty payable to the loan agreement and property insurance premium. SBI charges 0.50% of the loan amount as a processing fee subject to a minimum of Rs 2000 and a maximum of Rs 20,000 plus applicable taxes. The tenure of the loan is 10-15 years, depending on the age of the borrowers.Īlso Read: Getting your pension in SBI? Here’s a guide to Video Life Certificate submission from home Interest Rate and Fees The minimum amount that can be availed through the Reverse Mortgage Loan facility is Rs 3 lakh and the maximum is Rs 1 crore. In case of the joint borrowers, the age of the spouse should be more than 58 years. In the case of a single borrower, resident Indians aged 60 years can apply for the Reverse Mortgage Loan. Alternatively, the legal heirs can keep the house by repaying the loan. ![]() It returns the balance to the legal heirs of the borrower if the property is sold at a higher price. After the death of the borrower, the bank sells the property.This means the amount that you will actually get would be equal to the sanctioned loan minus the interest on the loan. The loan amount includes the interest component as well.For example, if the valuation of the property is Rs 50 lakh, then only Rs 40 would be sanctioned as a reverse mortgage loan. ![]() Banks generally consider a margin of 15-20% on property valuation while approving the reverse mortgage loan.Rising inflation is not accounted for as the monthly amount that you can receive is fixed.Banks offering Reverse Mortgage Loans do periodic property valuation, generally after every 5 years.National Savings Certificate (NSC) Interest Rate for July-September 2023 declared.
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