Page 22 - Seniorstoday June 2024 Issue
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his wife had passed, but the stoic in him made practical sense at this stage of his life.
carried him through his ‘single’ stage with I helped him set the wheel in motion and he
all its ups and downs. should soon be extricating himself from his
His concern was that the outstanding situation and be cash flow positive.
loan of the past had ballooned to a This incident veered my thoughts to the
huge outstanding amount, practically many senior citizens that I know or have
accounting for 75% of the current value of come across. Very few senior citizens are
his small apartment. The bank had been well off or have a handsome regular cash
badgering him for the repayment, but he flow or have a supportive family system.
had no cash flows to do that, given his Majority of them manage their monthly
stretched times. The current value was needs through some fixed deposit or bond
quite beaten down due to the age of the interest or pension. These incomes, by
property and the proliferation of housing their nature, can be nowhere near one’s last
in Mumbai. He was ruing the low valuation drawn salary, except for the few fortunate
of his apartment and was brainstorming ones who were in senior positions in
with me about the best course of action. He private sector or in government service
had rented out his apartment for modest or in political sphere enjoying permanent
rent which was helpful somewhat, but sinecure. Given the increasing life
nowhere close to funding repayment expectancy and inflation, it will be a matter
of the loan. After all, the rental yield of time before the mismatch of inflows
on properties is very meagre at 2 or 3% and outflows set in, adding to the woes of
whereas loan against property is an daily living. Their current inflows may no
expensive proposition at upwards of 10% longer enable them to ‘live happily ever
in the worst of times. I quite simply asked after’ that finance and insurance companies
him, given his current situation and the beguilingly hold forth and chase their
remote possibility of him ever returning retirement corpus. Many will be forced to
to Mumbai, to immediately sell his flat look for additional cash flows to manage
to any takers within the building society a respectable living. The absence of any
or outside of it, at whatever best possible social security net worth the name only
price and close out the loan. The cost of compounds the problem.
waiting would only stress him further, both When faced with such a situation, the
mentally and monetarily. After all, Lord home that many senior citizens would
Yama may send him an invitation any time have can come to the rescue. All it would
soon. He was sardonic, but realised that it need is a significant shift in thinking while
being grounded in reality. There is a loan
product, offered by most banks, called
Reverse Mortgage. This facility allows
a senior citizen (above the age of 60 in
India; in some other countries it could be
some other threshold like 62), owning a
home to enhance their monthly income by
borrowing against it without having to sell
it or repay monthly, while ensuring the
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