Reverse Mortgage: A Cultural and Financial Outlook in India

The principle of the Reverse Mortgage is that seniors can take a loan against a self-owned, mortgage-free housing property without moving out of their home. Unlike traditional mortgages, where borrowers must repay the loan monthly, Reverse Mortgage provides monthly payments to the borrower without repayment obligations or the need to show financial eligibility.

This study explores the correlation between attitude and acceptability of Reverse Mortgage in India, and whether culture mediates this relationship. It aims to identify potential loan seekers and evaluate the relevance of Reverse Mortgage within the Indian context, especially the influence of legacy and strong family ties.

The scope was limited to Mumbai's urban demographic. It revealed that Indian parents often prefer leaving property to their children, even without reciprocal support, which significantly reduces interest in Reverse Mortgage products.

The study highlights that changing lifestyles, rise in nuclear families, and escalating property prices in metros can affect the future potential of Reverse Mortgage schemes. However, lack of awareness and weak marketing strategies by banks are major hurdles.

Findings also show banks are modest in promoting the product, with low customer awareness. Concerns about decreasing property value over time and the cost of insurance guarantees further deter adoption.

Despite challenges, Reverse Mortgage holds promise for tackling elderly financial exclusion in India. With awareness and proper implementation, it can evolve into a vital financial tool for the aging population.