Mortgage means to place collateral. Therefore, mortgage loan in home loan industry is the loan taken against the property pledged as collateral. The mortgage loan is beneficial in comparison to other instant loans such as personal loan and business loan because of its rate of interest, processing fees, foreclosure charges & closure conditions, etc. Also referred to as Loan Against Property, a mortgage loan is taken to meet the personal fund requirements such as children education, child marriage, medical treatment, business expansion, etc. The mortgage loan by lender Bank/NBFC/HFC is provided only to those borrowers who has a regular flow of legal income and is within the maximum retirement age 60 years. As a result, the senior citizens were excluded from taking the mortgage loan. Hence with the view of extending the benefits of mortgage loan to the elderly the Union Government of India introduced the concept of Reverse Mortgage allowing them to borrow the funds through property mortgage, to meet their financials requirements of day-to-day expenses and increasing cost of medical treatments.
Difference between Mortgage Loan & Reverse Mortgage Loan
Reverse Mortgage Loan
A mortgage is a type of secured loan as it is secured against the collateral provided. The collateral means pledging of property to obtain the loan.
Loan for senior citizen above 60 years to avail regular/periodical payments from Banks/ NBFC against the mortgage of their house while still retaining the ownership of the house and occupying the same.
Who Can Apply
Salaried and self employed individuals.
Retired, senior citizens above 60 years.
Can be used for children education, child marriage, business expansion.
Can be used only meeting the livelihood expenses and medical expenses.
Can be used for purchasing another property.
Cannot be used for any investment or purchasing property.
Ownership residential as well as commercial property can be mortgaged.
Only ownership residential property can be mortgaged.
No commercial property is allowed.