Punjab National Bank (PNB) has geared up to launch reverse mortgage loan called 'PNB Baagbaan' on the occasion of Baisakhi, April 13 across the country. Under this scheme senior citizens can avail loan along with interest upto Rs One crore against the house for at least 20 years. The interest rate would be 10% per annum. The margin of the bank would be 20 per cent.
The Union Budget proposals of 2007-08 included the introduction of 'reverse mortgages' in Indian markets. The novel product 'reverse mortgage' under which a senior citizen who is the owner of a house can avail of a monthly stream of income against the mortgage of his house, while remaining the owner and occupying the house throughout his lifetime, without repayment or servicing of the loan.
The main objective of the loan is to generate income, supplement the pension or other income for day-to-day requirements. PNB has already framed it guidelines on the issue.
Talking to Hindustan Times BP Chopra, General Manager, PNB, Chandigarh, “ The loan would be extended as regular fixed monthly payments calculated during the loan period or till the death of the last surviving spouse. For example on a property valuing Rs 20 lakhs, the monthly amount of the installment payable at the interest rate of 10% will be Rs 3840”.
“After finalizing the loan transaction, senior citizens would be given three days time to cancel the transaction by way of Right to recession. Only after the ten days period the first monthly installment would be disbursed”, he added.
The tenor of loan would be 15 to 20 years for the age group of individuals between 60 to 70 years and 10 to 15 years would be for above 70 years. In case of joint account, the minimum age of the spouse for availing the loan under these two categories should be 58 and 68 respectively.
The loan would be secured by way of equitable mortgage of residential property in favour of the bank. The legal heirs of the borrower after the death of the borrowers would have an option to settle the loan with accumulated interest without sale of the property. In case the repayment of the bank dues is not made by the legal heirs and in case the consent of all the legal heirs in favour of option to settle the loan is not received the within the six months from the date last surviving spouse property would be sold to recover bank dues.
Oriental Bank of Commerce and Allahabad Bank are also mulling over the scheme and would launch it soon.