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 off 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 counseling 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 to do
Assuming you are a senior citizen owning a house valued at Rs.1 crore, the loan amount (inclusive of interest till maturity) is Rs. 90 lakh (90 per cent of the property value), and the rate of interest is 10% p.a., you will be paid Rs. 21,510/- monthly. This is an indicative figure. The exact loan amount will, inter-alia, depend on the market value of the residential property as assessed by the lender and the prevalent interest rate (decided by the lender).