Retirement planning: How does reverse mortgage loan help senior citizens to monetise their homes?

livemint.com:

medical expenses. Reverse Mortgage Loan (RML) is a financial product that is meant explicitly for seniors so that they can monetise their homes while retaining their ownership during their lifetime. It is just the opposite of a home loan.

In a home loan, the bank is the 'actual' owner of the home, and when you repay the home loan, you become the actual owner of the house. In the case of RML, the banks offer payment to elderly citizens. It can be either lumpsum or in regular intervals, such as monthly or quarterly.

Another important distinction between home loans and reverse mortgages is that in the case of home loans, the borrower repays the loan amount in regular instalments, and a reverse mortgage doesn't require any immediate repayments. The loan amount, along with the accumulated interest, is recovered by the bank once the last surviving spouse passes away or shifts to a retirement home/relative's house permanently. There are several benefits of reverse mortgages for senior citizens.

Here are a few: An additional source of income: Most senior citizens depend on interest income from their bank fixed deposits and post office savings. A few of them might get pensions as well. However, after retirement, as the expenses and healthcare costs increase, these income sources might fall short.

In this aspect, elderly people can receive an additional source of income, which might help them to live in a dignified manner. Retention of property ownership: During the loan tenure and beyond, the elderly couple can continue to live in their house without any fear of eviction. It is also applicable after the loan tenure is complete.