Reverse Mortgage Loan - Explained in Hindi - YouTube

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Namskar, I'm Mukul and you are welcome to Asset Yogi

Where we do not lock rather unlock the knowledge of finance

In today's video, we were going to talk about the reverse mortgage

If your age is more than 60, you are a senior citizen, most likely you would have retired

Or someone in your family is who is retired or going to be retired

So it is very important to you to know the concept of reverse mortgage

It is very obvious after retirement in old age many emergencies come, some are medical expenses

Your's regular expenses

But after retirement, it becomes difficult for many people to meet their monthly expenses

And many senior citizens become dependent on their family

But suppose you have a property then you can utilize it quite well,

Bank will give you a monthly income based on your property

This is what we call the reverse mortgage

How does this whole concept work,

What are its benefits and disadvantage

what are the important feature of it

In this video, I will tell you about it in great detail

You must watch the video from the beginning till last so you can't miss any important point in it

Let's move straight toward the blackboard

As I said earlier, a Reverse mortgage is contrary to the home loan

What happens in an actual loan when you take a home loan taking a loan from a bank

So your property is actually with the bank

He is the real owner until the time you made full payment to the bank

Slowly as you make payments, ownership transferred to you

And this way ownership is transferred to you and you make payments to the bank

You are paying your monthly EMI's

As this monthly payment is done, you pay the principal amount, the bank receives its payments

And finally, ownership transferred to you

A reverse mortgage is just the opposite of it

Suppose you are old and needed money

You have a property but you do not have enough money to meet monthly expenses

In that cases, you can Reverse mortgage your property, and gradually ownership will be transferred to the bank

As you see here, ownership is being transferred in your name, gradually as you make payments

Now here's what happened that bank will make payments to you

You reverse mortgage your property to the bank gradually, ownership will transfer to the bank

In return, the bank will pay you monthly

There can also be a lum-sum amount instead of monthly payments

And this depends on what type of payment you opt for

Payments can be quarterly and half-yearly

So this is how reverse mortgages work

Mainly are two steps, first, you mortgaged the house to the bank

In the second step, monthly payment initiates to you

Whatever is your payments Quarterly, half-yearly, annual payments

Bank initiated your payments

The third step comes in that, at the time of death what will happen

Suppose you're a senior citizen, what will happen to your property after your death

After death two option comes out

First is your legal heir can pay off your loans,

I write to pay off here

Later the bank to the legal heirs,

I write legal heir, let we say 3a to it

Bank will transfer the house in the name of the heirs

If your legal heirs pay off all the loan amount with interests

Banks transfer's property in his name

The second option, when your legal heirs are not interested in your property

Then the bank can sell it on a market

If it sells in the market

The money comes to the bank, from the market,

Here I make a rupee symbol

So this way funds will come to the bank

And the excess amount will be

Suppose the property sold for 1 Cr,

The dues of a bank were 70 L only

And the excess, which rests transferred to the legal heir

So here two come out.

In one 3a we say legal heirs brought

The property directly from the bank

In the second option,

The bank gives the excess amount to the legal heirs, by selling in the market

We say 3b option to it

So this way the concept of reverse mortgage mainly works

Now we see some important features of Reverse mortgage

First of all, let's talk about purpose,

For which purpose the bank gives you the loan

Firstly if you are not able to meet your expenses

Suppose your pension or the regular monthly income is not enough

So if you want to add and supplement it to meet your regular expenses

You can take a loan or Reverse mortgage, or in any medical emergency

You can RM in the urgent requirement also

If you want to upgrade, renovate, maintenance and insurance your property

For that bank gives you money

But the Loan of RM is not for the businesses, Trading, speculation

If you are thinking that you can trade in shares from that money then it is not possible

You can not do gambling from that

If you are showing this proposal then you can not get

And if you lied to the bank for the loan then the bank can retake the money by auctioning the property,

Let's see the eligibility requirement

The first requirement is of Age the requirement age of the borrower must be 60 years,

If you are a joint borrower or the spouse borrower with the husband and wife together hiding the property,

And on that you are willing to take RM, then the age of the spouse must be a minimum of 55 years

The house must be self-acquired with own money and residential of ourself is important

If you are not leaning in that house then you are not liable for the RM

The title of the property must be clear, it must carry no further loans with the tax dues

There must be no lease on that, You must live in the house for the RM, if the house is on rent then you will not get RM

The residual life of the property is must be a minimum of 20 years more at the time of the loan

If the property is 40-50 years old, the ban will not give you that loan easily,

So these are the eligibility requirements, now lest talk about some important features

Tenure for the maximum years to get a reverse Mortgage loan

The RM loan for the minimum period of 10 years and the maximum period is 15 years

In specific cases some banks can give up to 20 years it depends on your age

If your age is 70 years the may be possible you can not get more tenure

In that case, only 10 years will be allowed the bank will not give more tenure according to your age

Let's talk about Max. loan amount

the max. the loan amount depends on the value of the property which is up to 60%

The main 2 reasons firstly is that bank has to take the interest cost

And secondly, the margin is fixed if the value of the property decreases in the future

For that also bank set its margin

You will get an only loan of up to 60% of the property value so if you value of the property is the market is 1 cr,

Then the RM loan you will get only up to 60 lakh

You can make monthly payments, quarterly payments, half-yearly, annually or the lump sum amounts also

Your interest amount will be added slowly steadily, and at the time of your death

At that time the bank will sell your property and will pay off your loan together,

Now lest talk about the interest rate

It generally exceeds the rate of the home loan as per the dynamic market

If you get the home loan at 8.5%

Then you can ensure that you can get a loan of up to 10%

It may differ up to 1, 1.5, or 2%

We have talked about its disbursement that you can make payment Monthly, quarterly, half-year, annual, or lump sum,

The current max. monthly payment is limited to 50k

But it may increase in the future

Max. lump-sum payment

Mainly for medical treatment of self, spouse & dependents, if any

Otherwise, lumpsum payment is not easy to get

And lumpsum payment you will get only up to 50% of the eligible loan amount

Lets sat if the loan of 50k is sanctioned

Then the lump sum amount the bank will give 25 lakh not more than that

Mainly for the medical treatment

The bank revalues the property every 5 years

The value of the property may fluctuate ups and downs,

If the value of property increases, let's say if it becomes 2Cr.

So your loan amount will also increase, Your 60% value will increase

If you want to take more loans in the future, then you can take them, as the value of the property is now increased

But if the value of the property decreases, then the bank will not give you a loan & won't increase the tenure

Prepayment is allowed, If you have any sources from where you can get the money

Then you can pay the loan, there are no charges for this

But if you transfer the loan to any another bank, then they take a closer charge of 2-3%

So these were some important features, Now we will talk about foreclosure

If some conditions don't match then the bank can sell your house during the tenure

What are their conditions?

1. Borrower not staying in the house for more than 1 year

So you should remember to stay in the house for at least 1 year

This means you should not leave the property empty for more than 1 year

2. Borrower did not pay property taxes & failed to insure

3. Borrower declared himself bankrupt

4. Property donated or abandoned by the borrower

Then the bank can recover their dues by selling the property

5. Additional encumbrances on the property = lease, loans, etc.

Then, in that case, the bank can recover their dues by selling the property

So you should remember these points

Now we will talk about the benefits

1. Regular Income

2. No dependency on children or family for basic expenses

You can live your life with dignity at old age

3. Payments not taxable

As it will be the loan amount, so the payments are not taxable, it will not be treated as an income

4. Borrower & spouse can occupy the house until death, even if the tenure is over

Even if the tenure is over, let's say if the tenure is of 15 years

And your age was 60 years when you took the loan

After 15 years your tenure period is over & you will be 75

And you & your spouse are still living & will live for another 10-15 years

Then too you can live in your house

Payments will be stopped after 15 years, but you can still live on your property

Now we will talk about the limitations

1. Liquidity of property

As we have talked about, when you take a reverse mortgage, slowly the ownership is transferring to the bank

You won't have it as an asset, as after 15 years the owner will be the bank

2. No payments after loan tenure

If your loan tenure is 15 years, then after 15 years, your payments will be stopped

Then it will be tough to meet your expenses, So in such a case

You should save some money in FDs or anywhere from where you can get the recurring income

The 3rd limitation or con is

3. Resentment of children, that their parents have not transferred the property to them

It is a mentality in India, that parents pass on their property/assets

But it is not important, if you want to earn an income from your property then Reverse Mortgage is a good option

You don't have to rely on others, your property can give you a good income

I have covered all the important points of Reverse mortgage, If you are a senior citizen or anyone in your family is

Then you can consider this option

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