Many senior citizens, retired from work worry about the dwindling amount in their bank accounts? Wondering how to maintain a steady cash flow to meet their daily needs? An option often thought of to deal with this problem, is to rent the existing house which seems a liability and move to a smaller house or to sell the house altogether and invest the proceeds to earn a higher monthly income.

Why not turn that liability into an asset? The answer - Reverse Mortgage.

“Reverse Mortgage is to a large extent a solution for those senior citizens who do not have a substantial source of liquid assets to depend on. Through Reverse Mortgage, their homes are virtually transformed into a source of steady cash flow, till the time of their death, giving them the financial independence to live a comfortable life with dignity,” says Mr. Mathew Cherian, Chief Executive, HelpAge India.

About 350 crore worth of Reverse Mortgage has been sanctioned. The National Housing Bank has received innumerable calls of inquiry from senior citizens wanting to know more. It is to tackle this influx of calls and give each senior citizen attention as per his/her needs, that information and counseling centres will be functional throughout the nation, at various HelpAge offices in 10 cities of India: Delhi, Chandigarh, Lucknow, Hyderabad, Chennai, Jaipur, Bangalore, Kolkata, Ahmedabad, Bhopal with especially trained staff.

“NHB has been interacting with HelpAge for a long time and feels that HelpAge is an ideal representative of senior citizens in the country. It was therefore natural that we get into a partnership with the organization,” says Mr. S. Sridhar, CMD, National Housing Bank.

This year’s Budget, opened doors for those seniors who were hesitant to try these untested waters, as the Government made it clear that the loan under Reverse Mortgage Scheme will not be considered as transfer of capital, thus putting it out of the purview of income tax. The loan will be extended by primary lending institutions like scheduled Banks, Housing Finance Companies registered with NHB. The amount of loan will depend on the market values of the residential propriety of the senior, age and prevalent interest rate.

Reverse Mortgage offers a ray of hope to senior citizens during the second innings of their life.

ABOUT REVERSE MORTGAGE

• Reverse Mortgage is a mortgage loan for senior citizens who are not eligible for any form of mortgage loan. 
• Eligible borrower should be a senior citizen of India above 60 years of age. 
• The lender makes periodic payments (including lump sum payments) to the borrower i.e. the payment stream is “reversed”, as compared to a conventional mortgage. 
• Maximum period of the loan – 15 years. 
• The loan is not required to be serviced i.e. payment of installment or interest, as long as the borrower is alive and in occupation of the property. 
• On the borrower’s death or on the borrower leaving the house property permanently, the loan is repaid along with accumulated interest, through sale of the house property. The borrower’s heir can also repay the loan with accumulated interest and have the mortgage released without resorting to sale of the property. 
• After adjusting the principal amount of the loan and accumulated interest, surplus, if any, will go to the estate of the deceased. 
• The borrower will also have the option of prepaying the loan at any time during the loan tenor or later (NHB has advised lenders not to levy any prepayment charge). 
• Periodicity: The loan will be extended as regular monthly, quarterly, half-yearly, annual periodic cash advances or as a line of credit to be drawn in time of need or in lump sum. 
• Married couples will be eligible as joint borrowers for financial assistance.  In such a case, the age criteria for the couple would be at the discretion of the Primary Lending Institutions (PLI), subject to at least one of them being above 60 years of age. 
• He/ She should be the owner of a self-acquired, self occupied residential property (house or flat) located in India, with clear title indicating the prospective borrower’s ownership of the property. The residential property should be free from any encumbrances. 
• The residual life of the property should be at least 20 years. 
• The prospective borrowers should use that residential property as permanent primary residence.  For the purpose of determining that the residential property is the permanent primary residence of the borrower, the PLIs may rely on documentary evidence, other sources supplemented by physical inspections. 
• With a Reverse Mortgage, the borrower remains the owner of the property. In the absence of social security, Reverse Mortgage Loan serves as a partial substitute for senior citizens.