Reverse Mortgage has been made tax free! this is an amazingly good gift to senior citizens who are balance sheet rich and cash flow poor!

Long long ago – to be precise in 2007 I wrote a few articles on Reverse Mortgage. Personally when I spoke to a few people in the mortgage business I realised that the marketing was very poor and the users were very reluctant.

Now there is more choice available…and hey what is reverse mortgage?

read on….

http://www.moneycontrol.com/news/loans-experts/all-you-need-to-know-about-reverse-mortgage_290417.html

http://www.rediff.com/money/2007/jul/09loan.htm

 

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  1. i wonder if families would allow reverse mortgage to succeed… the whole idea of passing on land/flat/house to next generation (and expectations of receiving such bonus) is entrenched like a disease in our culture.

  2. This is really good news. But I still feel that mortgage business is not controlled enough. Imagine Banks / NBFCs fool young people easily, what will they do to old people who has everything against them time / money / effort.

  3. So…help me understand *why* a bank like HDFC bank or ICICI bank will want anything to do with a 50 year old apartment? If I purchased a house at age 30-32 with a 20 year home loan, paid off my EMI till age 52, retired at 58, continued to live in the same house, then died at 84. Basically the flat is 50+ years old by the time the property becomes available to the bank.
    Above is a very nominal scenario.
    As per your description of how reverse mortgage would work, there are several concerns:
    1. By the time I retire or turn 60, the flat is already 28 years old. Nobody will touch it as it is quite old
    2. If the house were to be just 15-16 years old, I should have actually purchased it when I was 45, but then I can’t go for a 20 year loan, but rather a 10/15 year loan (as my earning period is just another 13 years)
    3. In case I cannot live in my home at age 70 but have to go to an old age home or with children, the bank may insist on terminating the mortgage even though I’m alive.
    4. If the property needs to be redeveloped, now there’s an extra hassle of getting NOC from the bank (and potentially changing terms/conditions of the agreement with the bank) even if I get money from somewhere for the redevelopment.

    The way I see it, only independent plot based houses can be possibly used for reverse mortgages. Because the land component will more than offset any age related problems.

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