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A sufficiently large corpus to meet expenses, a cosy home and a peaceful existence are what most people want for their sunset years. With a wellexecuted retirement plan, it should not be difficult to achieve these goals. But what if you are left sitting in the dining room of your house, trying hard to figure out ways to meet your regular expenses or a medical exigency? In such a scenario, a reverse mortgage loan can unlock the value of your house and provide a tax-free income.
"Normally, around 50 per cent of a person's lifetime savings are spent in building a house and most old people do not have any retirement plan or social security. If they need money, they need to sell the house. Reverse mortgage is a tool by which senior citizens can liquidate the equity without having to sell it, says P.R. Jaishankar, Assistant General Manager of National Housing Bank, or NHB, a Reserve Bank of India subsidiary.
In a reverse mortgage scheme, a bank offers a loan to an elderly individual or a couple against a residential property owned and occupied as their permanent home. The borrowers get the money as lump sum or in instalments. The amount can be used to supplement their income and meet other expenses, but...