We need to think about house rich but cash poor elders
Ours is a place where elders at the fag end of their life have no insecurity because of the social setup which has always reserved huge space for their comfort. But over a period of time this space has squeezed and it’s the financial insecurity which today remains a major concern for them. They own a house, but remain financially poor owing to lack of regular income to meet their day to day needs.
Here I am trying to make a point that getting old without any proper financial backup to meet day to day expenses can be upsetting. With the rising cost of living and no regular income at the old age can turn problematic. For an old aged person, the ideal situation would be to get a regular income flow without having to do any job. But how is it possible?
An elderly healthy man hailing from one of the posh areas in Srinagar is owner of a three-storey house. He doesn’t have dependents. Despite owner of the property, he lacks financial resources to meet his day-to-day expenses. Left out alone at the home, a serious illness to his spouse has left him wandering for financial support. An acquaintance had told him about a loan scheme offered by banks which can fund his living expenses as well as help him to negotiate treatment expenses of his spouse.
Normally loan is given to a person who has regular income and capacity to repay the loan. So, how was it possible to get loan? What’s this kind of loan?
It’s ‘Reverse Mortgage Loan Scheme’ and was announced in the Budget of 2007-2008 for elders who are owners of houses to avail loan. The scheme envisages that the loan is not to be repaid during the lifetime.
So, this made him think of availing the facility. But the elderly man was disappointed when he found that here the banks don’t offer Reverse Mortgage scheme.
Even as some nationalized banks do have such scheme in place, but they haven’t shown any interest in selling this product here. There may be an argument that this place (Kashmir) doesn’t require such product because of the healthy social set-up, especially within families. But keeping Reverse Mortgage Loan product in its basket is not also bad, as there is possibility of a crowd of the likes as mentioned above struggling for financial help to immediately fund treatment cost of his spouse.
Elders are always supposed to get a special treatment. Be travel, matters related to health or financial services, elders deserve a special deal. With the help of Reverse Mortgage Loan, owners who are ‘house rich but cash poor’ can have the luxury of living in their own houses and still meet all their financial obligations. The factors that are not taken into considerations are the income and medical histories and no medical tests are performed. The beautiful thing about reverse loans is that as long as borrowers meet criteria of being the right age and owning a house, they don't even have to have an income source at all to be considered.
Precisely, Reverse Mortgage is a financial tool which paves way for a customer to get money against the future value of the house and the borrower needn't pay back until he sells the home or dies.
It’s also important to note that one should go for Reverse Mortgage Loan only in dire consequences or if one has no one to leave his house to. Before deciding to avail the loan facility, it is of utmost importance that the person discusses the proposal with his family and more importantly with a financial advisor too. One should make a sound decision that he will not regret.
However, at the moment, banks operating here need to give a try to this product. The features of the scheme can be sewed as per our own social set-up.
Lastupdate on : Fri, 20 Jul 2012 21:30:00 Makkah time
Lastupdate on : Fri, 20 Jul 2012 18:30:00 GMT
Lastupdate on : Sat, 21 Jul 2012 00:00:00 IST
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