Reverse mortgage: Monetary succour for the elderly that failed to take off

Personal Fund

If you are a senior citizen and struggling to meet daily financial needs, your home can be a source of your livelihood and after a lifespan of working and raising family, senior citizens deserve a good phase of retirement and that’s when financial products come to their aid to lead a hassle-free life. The aged population, who possess a house but do not want to sell it, and yet, need regular cash flow, can opt for ‘Reverse Mortgage’ to help them monetise the value of their residential property.

The product, a loan scheme that permits people aged 60 and above to mortgage their self-occupied home to a lender in return for a loan paid in installments or lump sum, was introduced in India in 2007 for the asset-rich-but-cash-poor elderly people.

As the name suggests, Reverse Mortgage Loan (RML) is exactly the ‘opposite’ of a conventional home loan. In home loan, one pays monthly EMI to the bank, but in RML, one receives payments from the lender.

According to ANAROCK Property Consultants, a ‘Reverse Mortgage’ is a special type of loan against a home that allows the borrower to convert a portion of the equity in the property into cash.
The equity built up over many years of home loan payments can be paid directly to the borrower. However, unlike a traditional home equity loan, no repayment is required until the borrower(s) cease to use the home as their principal residence.


 “The good thing about reverse mortgage is that in case senior citizens’ children are well-off financially and can pay off most of the mortgage amount when the loan matures or the tenure ends, or if an old couple lives alone with no children and don’t feel like leaving their property behind, they can opt for this loan scheme”, says Varun Kalsi, Partner at PSA Legal Counsellors.