India’s Reverse Mortgage. Reverse Mortgage Alabama brings you news from India’s economic times, where they also have a different type of Reverse Mortgages. Should you reverse mortgage your home in wake of fall in interest rates? Find out
There was a lot of expectation when reverse mortgage, a scheme that allows people aged 60 and above to mortgage their self-occupied home in return for a loan—paid in installments or lump sum— was introduced in 2007.
But user interest in this product has remained low, primarily because of the high interest rates on reverse mortgage products. “Reverse mortgage makes more sense in economies with low interest rates,” says Sriram Kalyanaraman, MD and CEO, National Housing Bank (NHB)
Reverse mortgage is in a way a mirror image of home loans, where you take a lump sum loan and repay it through instalments.
In reverse mortgage, you take loans in instalments and repay the lump sum later. But interest rates for reverse mortgage are much higher than those for home loans, though not without reason. For instance, banks have to pay tax on the accrued interest, even though they receive the payments from the borrowers much later, which increases their costs. “In reverse mortgage, banks have to take over the house and sell it, which is a costly and time-consuming process,” says Adhil Shetty, CEO, BankBazaar ..
Leave a Reply