A reverse mortgage loan is specifically for senior citizens or individuals advancing that age. For individuals who own properties but do not have access to cash at hand, this scheme is exceptionally beneficial. The repayment is usually with the demise of its borrower.
Major benefits offered under this scheme are discussed below.
No end-use restriction: Loans that have end-use restrictions can only be used to finance the specific purpose for it has been availed. In the case of reverse mortgage loans, the amount has no restriction on its use. Consequently, borrowers can utilise the funds for any type of expenditure.
Regular financing: These loans keep financing the borrowers periodically. Usually, borrowers opt for monthly payment, though depending on the financial institution, other payment frequencies are also often offered. Periodic source of money can be especially helpful for senior citizens since they do not have a regular source of income.
Co-borrower benefits: Spouses who are registered as co-borrowers can avail all the facilities of such loans even if the primary borrower passes away. In case a spouse is not registered as a co-borrower, generally, financial institutions allow them to stay at the mortgaged property even with the passing away of the primary beneficiary.
However, mortgage loan interest rates are generally quite high. Additionally, repaying them with a lump sum amount can be very difficult.
In case a borrower wants to avoid these difficulties, they can simply opt for secured loan like a loan against property.
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