NHB relaxes age norms for reverse mortgage loans

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New Delhi, May 31: National Housing Bank (NHB) in its guidelines on the proposed reverse mortgage loans for senior citizens, has underlined that the scheme would be restricted to the self-acquired, self-occupied residential properties owned by senior citizens, having a residual life period of at least 20 years. Further, it also said the primary lending institutions (PLIs) may consider ensuring that the equity of the borrower in the residential property (Equity to Value Ratio—EVR) does not at any time during the tenor of the loan fall below 10%.

The PLIs have been advised to be selective in considering lump-sum payments option and may frame their internal policy guidelines, particularly the eligibility and end-use criteria. It may be noted that finance minister P Chidambaram in his budget announcement for 2007-08, said the scheme would be launched to support senior citizens, who have few social security options.

The scheme seeks to provide social security to senior citizens. Under this scheme, the lender would pay a monthly sum to the borrower against the security of a house. The property would be sold off by the lender and the loan repaid out of the proceeds after the borrower dies.