3 Reasons That Prevented The Reverse Mortgage Concept From Taking Off In India

High Interest Rate Compared To Other Loan Options

Interest on reverse mortgage loans ranges from around 10 per cent to 11 per cent p.a. under a floating rate system. Banks also offer reverse mortgage loans with a fixed rate system which is charged higher than the floating rate system. The interest rate usually varies from bank to bank and depends on factors such as margin rate, loan amount, etc. If compared to other secured loans, the interest rate on RML is a little higher. For example, interest on a loan against property starts at around 8.7 per cent p.a. and a loan against securities starts at around 9 per cent p.a. So, RML are expensive product for senior citizens and this is one of the reasons that they are not interested in it.

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