Reverse mortgage An additional source of income for senior citizens, other than the corpus they have amassed, can be a reverse mortgage. Here, a house that the senior citizen owns is mortgaged with a bank, which pays a predetermined amount over the period of the mortgage. After the period is over, the ownership of the house is transferred to the bank.

Who can avail this facility?

To be able to avail this scheme, the applicant needs to own the house. Any person who is of 60 years or more can avail the reverse mortgage scheme. In case of a married couple, at least one of them should be 60 years of age or more. The house to be mortgaged should have a residual life of at least 20 years or more. The property should be self-occupied by the applicant and not let out. It should also be free from any legal claims or encumbrances.

How much loan can be availed?

The loan amount depends on the prevailing market value of the property at the time of applying for the loan. Most

financing institutions keep a margin of 20% on this value and sanction a loan on the balance 80%.

How is it disbursed?

The applicant can opt to receive disbursement in two ways. They can either opt to receive a lump sum or receive periodic funding over an agreed number of years.


The property remains in the possession of the applicant during their lifetime. In case of joint applicants, the loan can be recovered only after the death of both husband and wife. The applicants need not repay any amount during their lifetime.

Points to note

  • The borrowers can take benefit of exemption from tax from the amounts received under reverse mortgage.
  • At any point, the borrower can prepay the due amount and take the property back.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

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