HT: Reverse mortgage is a mortgage loan for senior citizens: June 04, 2008 | Senior Citizens

A RAY OF HOPE

REVERSE MORTGAGING HAS COME AS A BOON FOR DELHI'S ELDERLY The advantage of this scheme is that I can continue living in the house, while earning a substantial amount per month from it SEEMA, Retired professor.........Neha Tara Mehta New Delhi

SEVENTY-FIVE-YEAR-OLD SEEMA Chandra (name changed), a retired university professor who is a widow with no children, finally has a way of paying her mounting medical bills owing to failed kidneys: reverse mortgaging her sprawling home in a Delhi suburb. Under the reverse mortgage loan scheme, she will take a loan against her home, and be paid Rs 49,000 per month for the next 20 years by her bank.

"The advantage of this scheme is that I can continue living in the house, while earning a substantial amount per month from it," says Chandra. She has waited for a year to avail of the reverse mortgage scheme, which invited considerable flak when it was introduced last year. With this year's budget clarifying that the loan taken under the scheme will not be considered as transfer of capital and thus be kept out of the income tax purview, Chandra decided to try her hand at it.

To help other senior citizens like Chandra avail of the scheme, HelpAge is tying up with the National Housing Bank (NHB), a housing finance regulator, on starting counselling centers on reverse mortgage. The MOU, which will be signed on June 3, will see counseling centres coming up at HelpAge offices in Delhi, Chandigarh, Lucknow, Hyderabad, Chennai, Jaipur, Bangalore, Kolkata, Ahmedabad and Bhopal.

Says S. Sridhar, CMD of the NHB:, "For most people, investing in a house is the most important component of their wealth. Reverse mortgage is a way of monetising their home." Adds Mathew Cherian, chief executive, HelpAge India, "Through this scheme, the homes of senior citizens are virtually transformed into a source of steady cash flow, till the time of their death, giving them financial independence."

WHAT IS REVERSE MORTGAGE?

1 Reverse mortgage is a mortgage loan for senior citizens who are not eligible for any form of mortgage loan.

2 On the death of the senior citizen, the loan is repaid with the interest by selling the property. Heirs can also repay the loan with interest and retain the property.

3 Maximum period of loan is 20 years. The senior citizen will not be evicted from the house if he/she outlives the period. Monthly payment will not exceed Rs 50,000.

4 Even if the senior citizen passes away, the spouse can continue to occupy the property until his/her demise.

URL: http://epaper.hindustantimes.com/artMailDisp.aspx?article=04_06_2008_011_007&typ=0&pub=264