INDIA: Reverse Mortgage Products Offered To Seniors By State Bank

MUMBAI, Maharashtra (The Economic Times), October 11, 2007: State Bank of India (SBI) has become the first bank in India to introduce reverse mortgage products for senior citizen after guidelines were issued by the National Housing Bank earlier this year. The loan is for those above 60 years and can be availed in monthly or quarter instalments or as a lumpsum payment at the beginning against the security of their self-acquired and self-occupied houses. Joint loans are possible if the spouse is over 58. The loan will soon be made available at all branches of SBI. The loan carries a fixed annual interest rate of 10.75%, subject to reset at the end of every five years along with revaluation of security and re-adjustment of loan installments, if necessary. For a loan of Rs 100,000, the monthly payment to the borrower on a 10-year loan is Rs 468 and on a 15-year loan, it would be Rs 225. Similarly, for a loan of Rs 100,000, the quarterly payment to the borrower on a 10-year loan is Rs 1,423 while on a 15-year loan, it would be Rs 687. The speciality of a reverse mortgage loan is that it need not be repaid during the life time of the borrower. Borrowers can continue to stay in their house during their lifetime. Thereafter, an option is available to legal heirs to repay the loan and redeem the house property. If this option is not exercised, the bank will sell the property and liquidate the loan. Copyright © 2007 Times Internet Limited