A popular and commonly used financial facility in the United States and Europe, with unexplored yet potential in the Middle East, is the Reverse Mortgage concept. This very secure lending model often could be also highly profitable for financial service providers.
In Dubai, since 2002 foreigners can buy homes and obtain residence visas with a later date. Banks are easily approachable for mortgage financing. Most of them offer competitive interest rates in the range from 4.99% to 8%. During the past few years, property auctions also become a popular term. Only in 2012, up to 80 properties are expected to go under the hammer.
What is a Reverse Mortgage?
A reverse mortgage or lifetime mortgage is a loan available to senior citizens. Although, more than half of the population of Dubai is now aged bellow 30, soon this will change. More foreigners are expected to opt buying retirement home in the city, due to its growing popularity of a lifestyle destination.
Reverse mortgage, as its name suggests, is the opposite of a typical mortgage or a home loan. In a typical mortgage, you borrow money in lump sum right at the beginning and then pay it back over a period of time using equated monthly installments.
In a reverse mortgage, you pledge a property you already own with no existing loan outstanding against it. The bank, in turn, gives you a series of cash-flows for a fixed tenure.
In some countries, the tenure is up to 15 years and the owner of the house and his/her spouse continue to live in the house till their death. So, any senior citizen, opting for reverse mortgage will get some monthly amount from the bank for 15 years. After that, the payments stop, but they can continue to live in the house.
Reverse Mortgage solution for senior sitizens can actually come right in place in the UAE, where a central penssion system is not yet in place. It will help many older people to live their final years with dignity, without being dependent on their relatives or social help.
In the United States, customer reviews prove a history of excellent service from reverse mortgage providers. Reverse mortgage terms could tailor-made to their needs and accompanied by extraordinary customer service.
