Home Loan in Reverse Gear

A conversation between two friends 

It was a slow, balmy afternoon, and the community park was its usual peaceful self. On the same bench as every Tuesday, sat two long-time friends - Mr. Inder and Mr. Ramesh - both retired, both comfortably grey, and both unusually curious about financial trends.

“Ramesh,” Inder began, “have you heard of this thing called a reverse mortgage?”

Ramesh looked up from his newspaper, amused. “Of course. That’s where the bank pays you instead of the other way around. Sounds too good to be true, doesn’t it?”

Inder chuckled. “That’s what I thought too. I mean, imagine - you’ve worked your whole life, bought a house, and now they say the house can pay you back.”

“Yes,” Ramesh nodded. “The concept is simple. If you own your home - no loans, no EMIs - the bank gives you money either as a lump sum, monthly payments, or a credit line. But it’s not charity. It’s a loan - and the interest keeps piling up silently in the background.”

“Exactly,” Inder said, leaning in. “And the interest is not paid every month. It just gets added to the loan balance, which keeps growing. The longer you live, the more you owe. When you pass away or move out permanently, the house is sold to repay the loan. Whatever’s left, if anything, goes to your heirs.”

Ramesh sighed. “That’s where I get uncomfortable. Our generation values leaving something behind. This scheme slowly eats into the value of your biggest asset. You live in your home, yes, but by the end, there’s not much left for your children.”

“True,” Inder agreed. “And don’t forget the hefty costs. High upfront processing fees, insurance, servicing charges... it’s not as light as it sounds. And the worst part? Even with this setup, you still have to keep paying property taxes and maintain the home. Miss any of that, and the bank can foreclose.”

“That’s the irony, isn’t it?” Ramesh mused. “They tell you it’s a way to secure your old age. But you miss a tax payment or skip the paint job, and boom - you risk losing the very roof over your head.”

Inder gave a small laugh. “What’s funnier? The scheme has been around for years, but barely anyone takes it. Banks are reluctant to promote it. People don’t fully trust it. It just… floats around like an unused tool in the attic.”

“Maybe it’s because it goes against what we were taught,” Ramesh replied thoughtfully. “We were raised to own our homes, not mortgage them in our final years.”

They sat in silence for a moment, watching a young couple push a stroller down the path.

“Still,” Inder said, breaking the quiet, “for someone with no savings, no family, and a house -  this could be a lifeline.”

“Yes,” Ramesh agreed, “but for most of us, it’s a last resort, not a go-to plan.”

They nodded in unison, old men at peace with their choices, content to let their homes remain what they had always been - places of shelter, not silent lenders.

To sum up, reverse mortgages may sound appealing but come with strings attached. Though available, they remain largely unpopular - both among financial institutions and retirees.

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