Reverse mortgage is proving to be a boon for senior citizens who are finally able to leverage the power of their property,
At 80, retired Professional Vipul Trivedi had no other option but to survive on the Rs4600 pension that he received every month. Single, having never married, his only asset was the 2-bhk flat in the western suburb of Malad in Mumbai.
“Groceries, bills, maids, festivals and birthdays of relatives; at the end of the month I am left with nothing,” he says. Trivedi, however, has seen a new option emerge in the last few months — one that revolves around his 550 sq ft flat but doesn’t involve selling it.
Banks call it reverse mortgage and it was Finance Minister P Chidambaram’s brainchild. Reverse mortgage is aimed at senior citizens like Trivedi, who don’t want to exercise the option of an outright sale but still want to encash the value their properties have acquired over the years. “I have made enquires with the Punjab
National Bank (PNB) for the scheme. As per my calculations I should get about Rs 11000 every month from the scheme. Then I could even save some money,” says Trivedi, whose flat has been valued at Rs 50 Lakhs.
What exactly is reverse mortgage and how is it different from a mortgage? S Sridhar , chairman and managing director of National Housing Bank (NHB), explains it thus:
“Reverse Mortgage Loan (RML) seeks to enable house owning senior citizens, who are above 60 years, to meet their financial needs without selling their property. The reverse mortgage is so named because the payment stream is “reversed” i.e. instead of the borrower making monthly payments to a lender (as in a conventional mortgage), a lender makes payments to the borrower.”
Currently offered by only Dewan Housing Finance Ltd, a housing finance company, and Punjab National Bank, the main aim behind launching reverse mortgage in India India
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