Have house but no money? Consider reverse mortgage!

Dr Mangala Borkar

(World Seniors’ week)

·Raghav and Malati, a childless couple in their late seventies, lived a life saddened by lack of money, illness and neglect. They lived in a small house that Raghav had purchased when he worked in a cloth shop. He stopped working after he had a stroke at 64 and his small savings flew away. Malati did not want to sell the house and move out. After she died, he dragged on for a couple of years on the charity of neighbors. After he died, a nephew who had never given them a rupee claimed the house.

·Sunita and Kantilal lived in poverty, with their mentally retarded eldest son. They had barely enough to eat and no money for medicines. The younger son, who was a manager in a company ,stayed 500 km away and had broken all ties with them. When Kantilal died, followed by Sunita a year later, this son took over the house, sold it, abandoned his elder brother on a railway station and both were never heard of again.

Both of these couples had their own house and perhaps ‘reverse mortgage’ could have helped them to live a better, dignified life. You do not have to sell your house, you live in it practically till you are alive. And get regularly paid too! Then yes-forget whether the bank who gave you a comfortable life gets your house after you - or the heir who shunned you pays the amount you used to the bank and gets it! You will not know - anyway.

Rajiv Khandalkar, official of IDBI bank, Osmanpura Branch, Aurangabad,answers queries-

·Purpose of this scheme for seniors?

Provides finance to senior citizens on a regular basis. The loan amount can be used for anything from upgradation or renovation of the house to any genuine need that includes medical expenses and food.

·Advantage? - You do not have to sell your house and move out and you are paid reasonably for living in it till you live!

·Tenure?: Maximum 20 Years

·Age? : Minimum age of entry by the main applicant is 60 years and that of co-applicant 55 years. Maximum age at termination of loan is 85 years. This may vary a little from bank to bank.

·Amount : Rs 5 lakh to Rs 200 lakh

·Type of property : Residential property owned by the senior(s).

·Valuation : By panel valuer of the Bank, revalued every five years.

·Loan amount: 60% to 80% of the valuation of the house.

·Mode of disbursement : Any or a combination of the following:

oMonthly, quarterly, half-yearly, annual payments, as decided mutually between the bank and the borrower. (Maximum monthly payment - capped at Rs 50,000).

oPayment of lump sum amount may also be considered for medical treatment for self, spouse and dependents - restricted to 50% of the total eligible amount of loan and not more than Rs 15 lakh. The balance loan amount would be eligible for periodic payments later.

Repayment: The outstanding loan amount shall become due and payable six months after the death of the last surviving borrower, or after the borrower permanently moves out to an elder care home or to relatives.

If the borrower or heirs wish to retain the property? The borrower(s) or the legal heir shall be provided with the first option to settle the loan along with accumulated interest, without sale of property.

oExpenses initially incurred for the processing of reverse mortgage can be covered through the loan. All nationalised banks have this scheme which is definitely very good for senior citizens who do not have money but have a house. However, awareness has to increase and mindsets have to change. Banks should be more encouraging and seniors should live in and on their own house without having fixed ideas that they MUST give their property to the legal heirs (who may not care for or about them!)

(The writer is professor of geriatrics, GMC, Aurangabad).