Reverse Mortgage - Turn Your Home Into Retirement Income

When your corpus falls short, your home can help — without you leaving it

The Problem

You've calculated your Freedom Number. You've tried the optimized 5.5% withdrawal strategy. But there's still a gap.

Maybe you're ₹30 lakhs short. Maybe ₹50 lakhs.

You have two obvious options: 1. Keep working — Grind for 3-5 more years 2. Reduce lifestyle — Cut expenses permanently

But there's a third option most people overlook: Your home.

If you own a house worth ₹1 Crore or more, you're sitting on a significant asset that's not generating any income. Reverse mortgage changes that.

What is Reverse Mortgage?

In a regular home loan, you pay the bank every month to eventually own the house.

In reverse mortgage, the bank pays you every month, and the loan is settled from your property after your lifetime.

Key features: - You stay in your home — No need to move - You receive monthly income — Like a pension from your property - No repayment during lifetime — Loan settles from property sale later - No negative equity — RBI rules ensure you never owe more than property value

It's essentially converting your "dead" home equity into living retirement income.

How Much Can You Get?

Banks typically offer 60% of property value (called LTV - Loan to Value).

Example: ₹1 Crore Property

That's ₹2-3 lakhs per year in additional retirement income — without touching your investment corpus.

Real Impact on Retirement

Let's see how reverse mortgage changes the math:

Scenario: Need ₹10 lakhs/year, have property worth ₹1.5 Crore

That ₹55 lakhs saved could mean retiring 4-5 years earlier.

When to Activate?

You don't have to start reverse mortgage on day 1 of retirement. In fact, deferring is often smarter.

Strategy 1: Immediate Activation (Age 60) - Start receiving income right away - Maximum total payout - Good if corpus is significantly short

Strategy 2: Deferred Activation (Age 65-70) - Use corpus for early retirement years - Activate RM when corpus depletes or market crashes - Preserves more equity for longer - **Often the optimal choice**

Strategy 3: Emergency Backup Only - Don't activate unless needed - Keep as "Plan B" for market crashes or medical emergencies - Maximum flexibility - If never needed, property passes to heirs intact

Our recommendation: Plan for Strategy 2 or 3. Know that RM is available, but don't rush to activate.

The Banks Offering Reverse Mortgage

State Bank of India (SBI) - Eligibility: 60+ years - LTV: Up to 60% - Interest: ~9.5% (variable) - Tenure: 15 years or lifetime - Property: Self-occupied residential

PNB Housing Finance - Eligibility: 60+ years - LTV: Up to 70% - Interest: ~10-11% - Tenure: 15-20 years

Other options: Central Bank of India, Union Bank, some HFCs

Note: Terms change periodically. Always verify current terms with the bank.

What About My Children?

This is the question everyone asks. Let's address it directly.

The math: - You take ₹60 lakhs as reverse mortgage - Over 20 years, interest accumulates to ~₹1.2 Cr total due - Property appreciates to ~₹2.5 Cr (assuming 5% annual growth) - Heirs receive: ₹2.5 Cr - ₹1.2 Cr = ₹1.3 Cr

Your children still inherit significant value. Just not 100%.

But here's the real question:

If your children are unable or unwilling to support your retirement, should you sacrifice your comfort to leave them a bigger inheritance?

If your children ARE willing to support you, then you might not need reverse mortgage at all.

Either way, your retirement security comes first. Discuss openly with family, but don't feel guilty about using YOUR asset for YOUR retirement.

Alternative: Sell and Rent

Reverse mortgage isn't the only option. You could also sell your home and rent.

Sell & Rent: - Get full property value upfront - Invest proceeds, generate higher income - More flexible to move - Full value to heirs (in cash, not property)

BUT: - You have to move (stressful in later years) - Rent increases over time - No "home" security feeling - Finding good rentals at 70+ is hard

Reverse Mortgage: - Stay in your home - Predictable income - Emotional comfort - Lower total income than selling

Our view: If you love your home and want to stay, reverse mortgage makes sense. If you're okay moving, selling might give better numbers. It's a personal choice, not a financial optimization.

Step-by-Step: Getting a Reverse Mortgage

Step 1: Check Eligibility - Age 60+ (you or spouse) - Own residential property - Property is self-occupied - Clear title, no legal disputes

Step 2: Property Valuation - Bank sends approved valuer - Market value determined - LTV calculated (typically 60%)

Step 3: Choose Payout Option - Monthly pension (most common) - Lump sum (for one-time needs) - Line of credit (draw as needed) - Combination

Step 4: Documentation - Property papers - Identity/address proof - No-objection from legal heirs (recommended, not always mandatory)

Step 5: Agreement & Disbursement - Sign loan agreement - Mortgage registered - Monthly payments begin

Timeline: Typically 4-8 weeks from application to first payment.

Common Questions

Q: What if I outlive the tenure? A: You continue staying in the home. Bank cannot evict you. Payments may stop after tenure, but residence rights continue.

Q: What if property value falls? A: RBI's "no negative equity" guarantee means you'll never owe more than the property is worth. Bank takes the risk.

Q: Can I repay and cancel? A: Yes, you can repay outstanding amount anytime and release the mortgage.

Q: What happens after I pass away? A: Heirs can either repay the loan and keep the property, or let the bank sell it and receive remaining equity.

Q: Is the income taxable? A: No, reverse mortgage receipts are loan proceeds, not income. No tax applicable.

Try the Calculator

We've built a simple calculator to estimate your reverse mortgage income.

[→ Reverse Mortgage Calculator](/tools/reverse-mortgage)

Enter your property value and see: - Loan amount available - Monthly income for different tenures - Impact on heirs (optional)

The Bottom Line

Reverse mortgage isn't for everyone. But if you: - Own a home worth ₹50 lakhs or more - Want to stay in that home - Have a retirement corpus gap - Don't want to depend on children

...then reverse mortgage deserves serious consideration.

It's not a "last resort." It's a smart use of your biggest asset to fund a comfortable retirement.

Your home took care of your family for decades. Now it's time for it to take care of you.

[Calculate your reverse mortgage income →](/tools/reverse-mortgage)