A reverse mortgage is a form of a loan against property, solely available to senior citizens in India. Retired people are often in need of emergency funds, but unlike salaried or self-employed individuals, their options for credit are limited. A reverse mortgage is one of the few secured loans available to such people.

Distinguishing feature of reverse mortgage

Unlike other loans, the borrower is not obligated to repay reverse mortgage India. This means no EMIs or other hassle related to loan repayment. Instead, the debt is cleared when you decide to sell the property, move to another house or pass away.

However, after your death, your legal heir can pay off this debt, preventing the sale of your property. This repayment must occur within 6 months from an applicant’s demise.   

This type of loan against property is apt for people who are retired. It keeps financial concerns at bay for the borrower.      

Are you eligible for a reverse mortgage loan?

Only a few NBFCs offer this loan in India. Even so, you must meet several eligibility criteria to apply for the credit. Listed below are some of the factors.

  • You must be at least 60 years old to avail money through the reverse mortgage scheme.
  • You must own a residential flat or house.
  • In case of a joint loan, one of the applicants must be aged over 60 years, while the other should not be younger than 58 years.

Depending on your lender, meeting additional requirements can be necessary. Enquire about the eligibility with the NBFC in question.

Generally, the loan amount is disbursed as monthly instalments. However, in the case of medical emergencies, NBFCs offer the entire loan as a lump sum amount. To claim the credit as a whole, you must submit proper proof regarding the emergency.

Your credit score also comes into play during the loan application. Moreover, mortgage loans influence your CIBIL scores as well.  

Documents required for the loan

Make sure you have the following documents ready during the reverse mortgage loan application. Failure to present the necessary papers can result in application rejection.

  • If you are a salaried employee, you need to present your salary slips.
  • Self-employed individuals must provide bank statements for the preceding 6 months, while salaried employees should provide the last 3 months’ bank statements.
  • Photocopies of your ID proof, including Aadhaar Card, PAN Card and others.
  • Income Tax returns are another essential document you must provide.
  • Property documents related to ownership, registration and more.

The process for loan application

Financing companies today encourage online loan application, even though you can still opt for an offline credit application. If you decide to apply through the former process, here are some steps you need to follow.

Step 1: Fill up the detailed application form on the lender’s website and submit. Remember to check and verify the information you provide on the form before submission.

Step 2: If your documents and application form are in order, a representative will get in touch with you.

Step 3: Nowadays the loan approval process is extremely quick, with some NBFCs offering 24-hour approval as well. Wait for the approval notification.

Step 4: After approval, check your savings account for the disbursal of the loan amount. It usually takes 4 to 5 business days to disburse the funds.

Benefits of loan against property and reverse mortgage loans in India

LAPs are secured loans due to the presence of collateral in the transaction. These forms of credit offer higher loan amounts, considerably longer tenor and lower rates of interest.

  • Loan amount – LAPs offer substantial loan sums, ranging up to Rs. 3.5 Crore. This is considerably higher than most unsecured loans.
  • Tenor – Reverse mortgage credits have greater tenor flexibility, ranging from 2 years to 20 years.
  • Lower interest rate – If you decide to repay the reverse mortgage loan, the lower interest rate involved with it helps to control the cost of the loan.

These loans have no end-use restriction. This means you can use the loan against property for any of your needs.

Companies provide pre-approved offers on loan against property, making it quicker and easier to avail. These offers are available for a range of secured and unsecured credit, including home loans, credit cards, personal loans and more. You can check your pre-approved offers by providing your name and phone number.