How can I support my parents financially? A Reverse Mortgage could be your answer
- Kiran S N
- Jul 23
- 4 min read
Most of us spend a lifetime building a home, but rarely think about how that very home could support us in retirement. What if your house could pay you back month after month while you still live in it?
If you're a working professional worried about supporting your parents’ monthly income needs but unsure how to step in without disrupting your own finances a reverse mortgage can help.
It allows your parents to receive a steady, tax-free income from the home they already own, without selling it or relying entirely on your support. You still have the option to retain the property later by repaying the loan on their behalf, if you wish.
What is a Reverse Mortgage?
Think of it as a home loan in reverse. Instead of you paying EMIs to a bank, the bank pays you either monthly, quarterly, or as a lump sum against the value of your house or apartment.
The catch? You must be a senior citizen aged 60 or above, and the home must be your primary residence (not a second home or rental property) and you continue to live in the house.
The loan is repaid only after your passing, either by selling the house or by your legal heirs settling the dues and keeping the home.
Who Can Apply?
A single borrower must be at least 60 years old. For joint borrowers, the primary applicant must be 60+, while the spouse should be at least 55 years old. The property should be legally owned by you and free of any disputes, encumbrances, or unclear titles. Additionally, your home must have a residual life of at least 25 years, certified by a qualified engineer.
How Much Loan Can You Get?
You can borrow up to 65% of your home’s current market value (It can vary from bank to bank), based on the bank’s valuation. The maximum loan amount is ₹2 crore in metro cities and ₹1.5 crore in other areas.
Payments can be structured in three ways: as monthly or quarterly income, a one-time lump sum (up to ₹15 lakh), or a combination of both depending on your financial needs. For instance, if your house is valued at ₹1 crore, you may be eligible for a loan of up to ₹65 lakh spread over a period of 10 to 20 years.
Loan Tenure & Repayment
The loan tenure depends on the age of the youngest borrower and usually ranges from 10 to 20 years. However, you don’t have to repay anything during your lifetime. After the last surviving borrower passes away, your legal heirs have the option to repay the loan and retain the property, or the bank will sell the home to recover its dues. Any surplus amount after settling the loan is handed over to the legal heirs.
Which Banks Offer It?
What Are the Risks or Conditions?
There are some important conditions to be aware of. You must continue living in the home throughout the tenure of the loan. If you permanently move out for example, to live with children or in a care facility the loan becomes due for repayment.
You are also required to maintain the property, keep it insured, and pay property taxes on time. Interestingly, remarriage during the loan period can also trigger foreclosure. Moreover, the bank will reassess the property’s value every three years, and in case of a drop in valuation, future payouts may be revised downwards.
Key Benefits
Reverse Mortgage allows you to retain full ownership of your house during your lifetime. It offers a steady stream of income without the need to sell or rent your property. There are no EMI obligations, and if you wish, you can prepay the loan at any point without attracting any penalty.
Tax Benefits: 100% Exempt
Reverse mortgage payouts are fully tax-free under Section 10(43) of the Income Tax Act. This is not “income” in the traditional sense it's a loan, so no capital gains or income tax applies.
Things to Keep in Mind
While the benefits are real, it's important to consider a few practical aspects. Reverse Mortgage loans come with floating interest rates, so staying informed about rate changes is crucial. Your legal heirs must be made aware of the loan terms, especially since they’ll need to decide whether to repay and keep the property or let the bank sell it.
Also, ensure all your property documents including ownership, tax receipts, and title verification are in order. If you have plans to move elsewhere or do not intend to stay in the same house long term, this option may not be ideal.
In a world where pension coverage is shrinking and inflation eats into fixed deposits, a Reverse Mortgage can serve as a smart financial cushion for India’s ageing middle class. It allows you to live with dignity, in your own home, while drawing a steady income from an asset you already own.
But like all financial products, it’s not a one-size-fits-all solution. Talk to your family. Consult a financial advisor. And weigh it against other options before signing on the dotted line.
Research by : Don David ( linkedin.com/in/don-david-vadassery-7a3609248 )
Disclaimer: The information provided in this article is intended for general awareness and educational purposes only. Actual loan eligibility, interest rates, payout amounts, and terms may vary depending on the lender, property valuation, and individual borrower profile. Readers are strongly advised to consult with their bank or a qualified financial advisor before making any decisions related to reverse mortgage products.
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