Economic growth doesn’t erase all the problems a nation needs to meet. India has been able to provide better paying jobs for its young, skilled professionals, but senior citizens still face financial concerns in their retirement. This is a society where younger family members traditionally care for their elders, but that’s changing as India becomes more modern.
The government estimates that only 10% of the population has access to a credible pension plan. Recognizing this, the government has made it a priority to find ways to provide income security for the country’s retirees.
A modernized approach: the reverse mortgage
Among the first steps the government took was to introduce reverse mortgage loans in 2007. The goal of the program is the same as it is in the U.S. – to allow seniors access to the cash that’s locked up as equity in their homes. Indian seniors as young as 60 years old can have access to a reverse mortgage and free up their home equity in the form of a lump sum payment, a line of equity, or monthly payments.
There are many similarities between reverse mortgages in India and the US. The amount of the reverse mortgage is still determined by a variety of factors including the value of the home and the age of the borrowers. Both countries ensure that seniors are protected through strict regulation of the industry. Probably the biggest difference between the two countries is that India allows for access to home equity at a slightly younger age.
Many of the largest lenders in the country now offer reverse mortgages. Yet few seniors have taken advantage of the program.
What the media says
A recent editorial on CNBC India’s website read, “Needless to say that if more awareness is actually created about the [reverse mortgages] and more robust marketing of the product undertaken by [lenders], this [program] can ameliorate the rundown condition of elderly people in India.”
Caring for the elderly: a global concern
It’s interesting to see two countries as different as the U.S. and India face the same problems. Taking care of citizens has always been a concern of civilized societies. But that concern is generating more attention these days, especially as children move away from home to pursue careers – a continuing and likely lasting trend for both countries.
Real estate represents one of the largest investments people will make in their lives, no matter where they live. Reverse mortgages recognize the value of the home and offer to convert that value into cash that homeowners can use while staying in their home, no matter where in the world they live.