SBI To Offer Reverse Mortgage Loan

State Bank of India (SBI) will be rolling out SBI Reverse Mortgage Loan, a product for senior citizens, above the age of 60 years this week.

Against the security of their self-acquired, self-occupied houses, senior citizens can avail of a loan that will be released in monthly or quarterly instalments or as a lump sum payment at the beginning based on their need.

The loan will be given jointly if the spouse is alive, provided he/she is above 58 years of age. The loan need not be repaid by the borrowers during their lifetime. They will also continue to stay in their houses during their lifetime.

Thereafter, an option is available to the legal heirs to repay the Bank loan and redeem the house property. If this option is not exercised, the bank will sell the property and liquidates the loan. Surplus, if any, will be passed on to the legal heirs.

Reverse mortgage loan will be launched on October 12 and will be available at all branches of SBI. The loan carries a fixed interest rate of 10.75 per cent per annum subject to reset at the end of every 5 years along with revaluation of security and re-adjustment of loan instalments, 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.

LIC Housing Finance is also ready with a reverse mortgage product and plans to launch it soon. Says SK Mitter, director and chief executive of LIC Housing Finance said, “Reverse mortgage product is on our agenda. There is a market for reverse mortgage. We are ready with the product as per the guidelines issued by National Housing Bank and will launch it in some time.”

So far Deewan Housing Finance is the only company that offers reverse mortgage loans.