State Bank of India plans to launch SBI Reverse Mortgage Loan on October 12th 2007.
This product focuses senior citizens, above the age of 60 years. They can get a loan against the security of their self-acquired, self-occupied houses in monthly or quarterly installments or as a lump sum payment at the beginning based on their need.
Senior couples can take a loan jointly, provided one of them is above 58 years of age. The loan need not be repaid by the borrowers during their lifetime. They can continue to stay in their houses during their lifetime.
The legal heirs can redeem the house property after repaying the loan. If this option is not exercised, the bank will sell the property and liquidate the loan. Surplus, if any, will be passed on to the legal heirs.
The reverse mortgage loan will be available at a fixed interest rate of 10.75 percent perannum, subject to reset at the end of every 5 years along with revaluation of security and re-adjustment of loan EMI’s, if necessary.
For a loan of one lakh, 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 one lakh, the quarterly payment to the borrower on a 10 year loan is Rs 1,423/- and on a 15 year loan it would be Rs 687.
Deewan Housing Finance was the only company offering reverse mortgage loans in India till now.