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Reverse Mortgages In India Essay

3542 words - 15 pages

|Reverse Mortgage India |
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|Reverse Mortgage in India still at an infancy stage. The reverse mortgage came into existence in the UK during the ...view middle of the document...

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|The Dealing Parties: Reverse mortgage loan involves two parties, the borrower - the senior citizen and the lender - any bank or housing | | |
|finance institution. | | |
|Security for the Lender: The borrower pledge their home property to a lender | | |
|Payment of the Loan to the Borrower: In return of the house property pledged, the borrower gets a lump sum amount or periodic payments | | |
|spread over the borrower's lifetime that can be utilized by the borrower (senior citizen) as per needs and not for speculative purposes. | | |
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|Repayment of Reverse Mortgage Loan: The homeowner and now the borrower will not be required to repay the loan during his lifetime. On his | | |
|death or leaving the house permanently, the loan along with the accumulated interest is repaid through the sale of the property pledged. | | |
|Home Value Falling Short: In case the accumulated interest and loan amount is larger than the value of the mortgaged property, the | | |
|mortgage loan is capped at the value of the home equity only and the lender is the party at loss. | | |
|Home Value in Excess: Any excess amount by the sale of the property is duly remitted to the borrower incase of permanent leaving of the | | |
|house or his heirs in case of the death of the borrower. | | |
|Freeing the property from reverse mortgage: In case you get an additional income and accumulate an amount to repay your loan, you can free| | |
|your property in mid term and can also apply for re-reverse mortgage if required on the same property. | | |
|In the usual mortgage loan, the borrower begins with a large loan and lower equity in his house. In reverse mortgage however, the borrower| | |
|has a very high equity in his house and a non-recourse loan secured by the home property. In the usual mortgage system, as the regular | | |
|mortgage payments are made the outstanding loan decreases and the house equity increases. Reverse is the case in reverse mortgage, the | | |
|loan amount increases with time and the home equity decreases with time. | | |
|Reverse Mortgage Pros and Cons | | |
| ...

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