Mumbai: LIC Housing Finance (LICHFL) said on 14 June it will launch reverse mortgage schemes for senior citizens in a couple of months, under which the elderly will be able to take a loan of up to 45% of value of their homes.
“We are interested in reverse mortgage. We are working on it and the product will be launched in a couple of months as the National Housing Bank (NHB) has already come out with guidelines,” LICHFL chief executive officer and director S K Mitter told PTI in an interview.
Under the reverse mortgage, senior citizens and their spouse will get loan of up to 45% of the value of their property with repayment stretching to up to 15 years, he said.
The person seeking reverse mortgage would have the option of getting the property revalued every five years and at the end of the term of the mortgage, he has to repay the loan amount with interest, he said.
The scheme would be available for senior citizens aged up to 75. One of the spouses could, however, be 55-60 years if the property is jointly owned.
Giving details of the scheme that is being worked out with the housing companies, he said the interest on reverse mortgage would be a floating rate on par with the prevailing rates on housing loans.
Since the issue of guidelines by the NHB, so far two lenders have announced plans for reverse mortgage scheme — Dewan Housing Finance and Bank of Baroda.
Mitter also said LICHFL may have the option to fix a cap on the total amount for reverse mortgage, particularly if the property value is very high, say Rs100 crore or so.
In the event of non-payment of the loan, he said the amount would be recovered by selling the property and the balance would be paid to the borrower if it fetched more than the borrowed amount and interest.
Though reverse mortgage is quite popular in developed countries, it is taking off only now in developing countries and it would be improved up on the experience gained, he said.