LIC housing finance Limited (LICHFL) is the latest player in the housing finance business to offer reverse mortgage loans for senior citizens.
The loan will be given on single or on joint basis with the spouse, if the spouse is over 60 years. The loan is being offered at a fixed interest rate subject to reset every five years. Under this scheme, senior citizens can avail the loan either on a monthly payment or a lump sum payment or a combination of both.
The property mortgaged should have at least 20 years of residual life. The maximum loan balance shall be restricted to 90 per cent of the value of the property and the loan balance will include interest till maturity.
Upon the death of the last surviving borrower or his/her intention to sell the house, the loan will become payable.
LIC housing finance also plans to offer reverse mortgage loans with a whole-life annuity provided by a life insurer.
The housing finance arm of the Life Insurance Corporation is reportedly in talks with insurance companies to work out a scheme where home equity could be used to buy an annuity that provides income for the entire life span of the borrower.