Parents like to leave the property as a legacy for their children

Parents with enough money can leave a legacy through the property, but this may not be the ideal way to pass your inheritance on to your children. Children’s desires and needs should not dictate the lives of parents. Parents should not feel disturbed if they are not in a position to leave property behind for their children.

Property Related Disputes

About 65 per cent of civil cases in India concern property disputes. However, 20-25% are related to land disputes. If you purchase a property for your adult children but do not leave a will, it could cause problems between siblings. This is true if the property is split among multiple children. there can still be disputes in spite of a Will.  Challenging of the Will is easily possible. Several archaic property laws can mean that the judicial settlement could take many years. Your children might end up spending a lot.

Property For personal use

Your children may not be able to use the property if they are abroad or in other cities. It will be either necessary to renovate the house or sold to buy a new one. This will incur a lot of costs and require a physical presence. It can also be a time-consuming and cumbersome task for children who live far away.

Property as Investment

Don’t leave the property to your adult children through a will if used as an investment. Avoid disputes by selling the property during your lifetime and distributing the money among them. You might consider giving liquid assets if you want to leave a lasting legacy.

Reverse mortgage loans are a good choice.

A reverse mortgage may be an apt choice if you purchased property to leave a legacy for your children, but they do not require it, or you are short on funds. You can also generate income while you’re still alive and sell the property when you die. The lending institution will dispose of the property after you die without your children’s consent. Children will need sufficient funds to repay the loan if they want to retain the property.

Reverse Mortgage loan Product

Banks have created a “Reverse Mortgage Loan” product, which caters to senior citizens’ financial needs. This is to continue the mission of meeting the aspirations of all segments of society at different stages of life.

Many problems come with old age. As individual ages, the amount of his income can decrease, leading to a greater dependence on others. Senior citizens can find it difficult to live the golden years in dignity with rising health care costs and limited social security. Seniors need to have a steady income stream to help them meet their financial obligations and maintain their current living standards.

Senior citizens who have self-occupied or self-acquired property can use this loan to generate additional income. Senior citizens can take the loan against his primary residence. The property’s residual life should not exceed 20 years. The loan amount should not be used to trade, speculate, or for business purposes.

Reverse mortgages are loans and not income. Therefore, it is exempt from any tax.

The Reverse Mortgage Loan is a non-recourse mortgage loan that allows seniors to receive regular liquid funds against their home equity. They don’t have to move out, and they don’t have to make any payments until the homeowner dies or sells their house. The reverse mortgage is an effective tool to increase income in old age, as most retirement savings are in the form of home equity.

Senior citizens often find that their residence is a large part of their total assets. Because the property has low liquidity, it can be a common feature. Senior citizens can reverse mortgage their house property with a lender (a scheduled bank, or a housing finance firm).

Process of Reverse mortgage 

The lender will make monthly payments to the borrowers for a maximum of 20 years. The future interest and loan amount will equal 70% to 90% of the property’s assessed value, depending on the location. A maximum of 100,000 is allowed. The borrower’s savings account is charged with the payment.

The spouse and the borrower can continue to live in the property and receive income from the lender. The borrower need not repay the loan amount to the lender, and he does not need to pay any service charges. If the borrower cannot repay the loan, the lender will sell the property along with any accrued interest.

Old age and life expectancy

Indian society is seeing an increase in senior citizens and the country’s dependence on them. The combination of improved medical facilities and the decline of the joint family system has led to increased life expectancy. This has left them vulnerable in their last years. To supplement their income, seniors need to have a steady source of additional cash flow. Reverse mortgages can provide a stable and valuable income for seniors who have large amounts of home equity.

A loan can be taken alone or with a spouse who is still living. The minimum age for the first borrower must be 60 years, and the spouse must be at least 55 years. However, there should be no more than one spouse.

The loan will become due and payable when the last surviving borrower is dead, moves permanently out of the home or sells it to an institution or a relative.

Repayment of mortgage loan

A “permanent” move is typically a sign that the borrower and any co-borrower have not lived in the house for more than one year or they do not intend to continue living there. The bank may request any documentation that is necessary to support the claim. The borrowers’ proceeds from the sale or prepayment of residential property and their next-of-kin will be useful to settle the loan.

 The borrower or legal heirs are given the first right to pay the loan and interest which accrues. This is without the sale of the property. The bank allows the borrower to sell the house within a reasonable period, typically up to six months. After settlement of the loan, accrued interest and expenses are paid off; any surplus shall be passed to the borrower or his estate/legal heirs.

In November each year, borrowers will need to provide proof of property insurance renewal, tax payment, and annual -life certificates. In addition to the balance confirmation, the life certificate will include clauses about marital status and permanent residence. Banks also obtains a list of legal heirs at the time of loan sanction. To avoid disputes when legal heirs settle the loan amount, the borrower’s will must include specific instructions regarding inheritance and payment of any balance amount (if any) after paying the bank’s dues.