LICHF’s reverse mortgage soon; awaits nod on insurance tie-up

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Mumbai: State-run home finance company LIC Housing Finance is awaiting the National Housing Bank’s tie-up with insurance companies before launching its reverse mortgage scheme for senior citizens.

“We have the product but we are waiting for certain clarifications on tax issues and the insurance tie-up. The taxation issue has been cleared and once the insurance tie-up is done, we will launch the product,” LIC housing finance director and CEO RR Nair said.

The National Housing Bank (NHB) is tying-up with insurance companies, including LIC, for restructuring of reverse mortgage.

Reverse mortgage is a financial product that enables senior citizens (60-plus) who own a house to mortgage their property with a lender and convert a part of the home equity into tax-free income without having to sell the house.

“We do not have any date fixed for launching as we do not know how much time this (insurance) tie-up will take,” Nair said, adding there was no upper limit in reverse mortgage as it was the percentage of property prices.

The percentage depends on discounting and age of the owner (life-expectancy), amongst others, he said.

Reverse mortgage would prove very beneficial for those senior citizens residing in India but whose children were settled abroad, he said.

“For an NRI, spending a few lakhs on a property which can help his parents live in comfort and with which they could also generate income was not a big thing.”

Reverse mortgage will gather momentum as more and more young Indians were taking up jobs abroad and through this scheme they can help their parents get a regular income.

“Now, more and more Indians are becoming world citizens and in the coming years or so, majority of the global workforce is going to become Indian. So, even if one wants to take care of his parents he can’t do it because of his location,” Nair said.

“The remittance from overseas would be one of his options for taking care of parents. To avoid this, he himself can buy a property in the name of the parents and arrange with a home finance company for a reverse mortgage,” he said, adding this will help his parents obtain a regular income.

While conceptually, reverse mortgage was very welcome, it had so far not picked up momentum in India because it was a new idea in the domestic market, Nair said.