Reverse Mortgage Scheme: Smart Retirement Planning

The Reverse Mortgage Scheme provides a unique financial solution for seniors who want to access the equity in their homes without having to sell or move. This article will go over the fundamentals of reverse mortgages, such as how they work, who can qualify for them, and their benefits and drawbacks.

Who is the reverse mortgage scheme for?

The reverse mortgage scheme is primarily designed for elderly people who own residential properties and are retired or nearly retired. Seniors can continue to live in their homes while using the equity to meet other financial needs, such as supplemental income or medical expenses.

How does the reverse mortgage scheme work in India?

For seniors, the reverse mortgage scheme functions as a loan secured by the property’s value. Several factors influence the loan amount, including the borrower’s age, the property’s value, and current interest rates. Unlike conventional loans, the borrower is not required to make repayments. Rather, the loan is repaid either when the borrower permanently moves out, sells the home, or, in the worst-case scenario, dies.

Purpose of the loan

  • It adds to the customer’s pension income.
  • The loan may be used to pay for property upkeep or insurance costs.
  • The loan can be used to cover all of the applicant’s other legitimate financial needs. 
  • Seniors who need assistance paying their expenses can turn their self-occupied residential properties into liquid cash by applying for a Canara Jeevan loan.
  • The loan amount may be applied to emergency expenses of any kind, including family expenses and medical needs.
  • The loan amount may also be used to pay back a previous loan that was obtained for the mortgaged residential property.
  • The loan can pay for costs associated with remodeling, extending, or upgrading the residential property.

Benefits for senior citizens

  • Supplemental income: The program helps senior citizens pay for living expenses and other financial commitments by providing a steady income stream.
  • Retained ownership: For the duration of their lives, borrowers are still the owners and are still permitted to occupy their homes.
  • Financial independence: The program helps seniors become financially independent by enabling them to handle their expenses independently of outside assistance.
  • No repayment burden: The lack of regular repayments is one of the main benefits, which relieves retirees with irregular income sources.
  • Security and stability: Knowing they can stay in their homes for as long as they want gives seniors financial security.

How does it work?

  • Property condition: The property ought to be no older than twenty years.
  • Primary residence: You have to have lived there as your primary residence for a minimum of one year.
  • Age: You have to be 60 years of age or older. Your partner must be at least 55 years old if you are applying with them. There’s no maximum age.
  • Debt-free property: There cannot be any outstanding debts or financial obligations on the home you use as collateral for the loan.
  • Loan amount: Although it can be as low as ₹3 lakh, the minimum loan amount varies. Usually, the maximum is ₹1 crore.
  • Previous home loan: Before applying for a reverse mortgage, you must obtain a No Objection Certificate (NOC) from the lender if you currently owe money on the property.

Factors to consider when choosing a loan option and repayment structure

  • Individual financial goals: Think about your financial objectives, such as having a lump sum set aside for particular expenses or securing a consistent source of income.
  • Health and longevity considerations: Vitality and longevity are important variables. A longer life expectancy could affect the decision between monthly payouts and a lump sum.
  • Property value trends: Analyzing trends in property values can assist borrowers in projecting future appreciation that might affect the loan amount.
  • Interest rate trends: Selecting between fixed and floating rate options can be aided by knowledge of interest rate trends.


Seniors who would otherwise have to move out of their homes are given a realistic financial flexibility option by the Reverse Mortgage Scheme. This retirement plan guarantees self-sufficiency, ownership retention, and a steady stream of income. This unique financial planning tool offers a multitude of usage options, minimal qualification requirements, and retirement security and stability.

Read more

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top