WEALTHY HOME: The reverse mortgage option allows one to pledge the house and get a dollop of money.
NEW DELHI (CNN-IBN), August 25, 2006:
For the elderly, a house is a prized possession, a tangible expression of accumulated savings that have appreciated over time. But because it is a also a home, the value of a house is just as money in a mattress.
There are cases where the pension or liquid savings are not big enough and the elderly are not be able to live in a manner that the value of their asset entitles them to.
This is because of their inability to encash it. Such people can be said to typically face a cash-flow problem.
For them, the National Housing Bank has come up with a reverse mortgage option which allows them to pledge the house and get a dollop of money monthly or in one go.
"He can also opt for a lumpsum payment. He can have it monthly on a committed line of credit and would be able to use it whenever needed. And when he dies or permanently leaves the house, the house will be sold by the bank to draw the value of the loan and interest. The excess will be returned to the heir of the citizen," S Sridhar, CMD of National Housing Bank, explains.
The facility will be made available by banks to people aged 62 years and above. The National Housing Bank will do the re-financing. The loan will be for a term up to 15 years. The value unlocked will be a function of borrower's age and value of the house. The loan can also be repaid without any pre-payment penalty. The interest will be based on the prevailing rate.
The National Housing Bank is currently sorting out issues with Central Board of Direct Taxes that the finance received by senior citizens is treated as a loan and not income. The bank is also trying to build in a mechanism where the loan amount could flow beyond 15 years.
By Archana Khatri
© 2006, Global Broadcast News. All Rights Reserved
August 25, 2006
INDIA: Old and Homely - Here is How to Earn
WEALTHY HOME: The reverse mortgage option allows one to pledge the house and get a dollop of money.
NEW DELHI (CNN-IBN), August 25, 2006:
For the elderly, a house is a prized possession, a tangible expression of accumulated savings that have appreciated over time. But because it is a also a home, the value of a house is just as money in a mattress.
There are cases where the pension or liquid savings are not big enough and the elderly are not be able to live in a manner that the value of their asset entitles them to.
This is because of their inability to encash it. Such people can be said to typically face a cash-flow problem.
For them, the National Housing Bank has come up with a reverse mortgage option which allows them to pledge the house and get a dollop of money monthly or in one go.
"He can also opt for a lumpsum payment. He can have it monthly on a committed line of credit and would be able to use it whenever needed. And when he dies or permanently leaves the house, the house will be sold by the bank to draw the value of the loan and interest. The excess will be returned to the heir of the citizen," S Sridhar, CMD of National Housing Bank, explains.
The facility will be made available by banks to people aged 62 years and above. The National Housing Bank will do the re-financing. The loan will be for a term up to 15 years. The value unlocked will be a function of borrower's age and value of the house. The loan can also be repaid without any pre-payment penalty. The interest will be based on the prevailing rate.
The National Housing Bank is currently sorting out issues with Central Board of Direct Taxes that the finance received by senior citizens is treated as a loan and not income. The bank is also trying to build in a mechanism where the loan amount could flow beyond 15 years.
By Archana Khatri
© 2006, Global Broadcast News. All Rights Reserved
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