Is your pension enough to sustain your and your wife?s needs and requirements in old age? Have you thought of how you will generate income once you reach your twilight years? No! It?s a familiar story all across middle-class India. Older couples struggle to live comfortably because of insufficient pension and post retirement funds.

But there is hope ? especially if you have property in your name. You can mortgage your home to a bank and derive an income ? monthly or lumpsum ? for 15 years while living in it. If you go for the lumpsum amount, you can deposit it in a bank, withdraw from your account according to your requirements and keep earning interest on the balance. It is called ?Reverse Mortgage?. The finance minister introduced the idea in this year?s Budget. Citizens aged 62 years and above are eligible for this scheme.

Life expectancy, currently at 77 years could increase to around 80 years by 2020. With the increasing old age population and life expectancy, Reverse Mortgage seems to have a potential market in India. Although new in India it is very popular in the United States, Canada and Australia, and fast catching up in Europe and Singapore.

Says Kamal Taneja, MD, TDI, ?Reverse mortgage is an upcoming product in India. It enables older homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. It is aptly named because the payment stream is ?reversed?. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.?

Adds KP Singh, DGM (Marketing), Pearls Infrastructure Projects Ltd., ?Reverse mortgages are so-called rising-debt, falling-equity loans, meaning, as debt increases, home equity falls. Lenders recoup this debt ? the accumulated principal and interest payments ? when the home is sold. The debt can never exceed the value of the home, and any remaining equity returns to the homeowner, the estate or heirs.?

Unlike ordinary home loans, a reverse mortgage does not require repayment as long as the borrower lives in the home. The lender recovers their principal plus interest, when the home is sold or on the death of the last surviving spouse, whichever is earlier. The remaining value of the home goes to the homeowner or any of his survivors. Says Suryavir Singh, spokesperson, Sahara Infrastructure and Housing, ?After the contract period, the borrower has the option of repaying the entire amount. In case the borrower fails to do so, then his heirs have the option of paying back the money and recovering the property or else the bank can foreclose the property and realise the loan and interest after selling the property.?

?The housing boom of recent years has fuelled record growth in these products, which give homeowners an income stream they don’t have to repay until they sell their home or die. But reverse mortgages have long been weighed down by high costs and complexities. Now, they’re coming in for a makeover that may save consumers thousands of rupees,? says PK Sanyal, president, OSB Group.

While Punjab National Bank is one of the first state?run banks to launch the product, Dewan Housing Finance Corp Ltd was the first private player to launch it in India. Recently, the National Housing Bank (NHB) announced its final operational guidelines on reverse mortgage.

What is the scene abroad? Says Kaushik Sengupta, vice president (Sales and Marketing), Eros Group, ?The concept of reverse mortgage is popular and a harsh reality in the west. Unlike India where old parents do look forward to support from their children, in the West children move along with their life after they grow up.?

The question is: will it become popular in India, where the family reigns supreme and parents would rather prefer to leave their property to their children? Says Sunil Jindal, CEO, SVP Group, ?The concept should be successful in India, if marketed well. It is not straight forward like other loans and borrowers may need to be educated about its intricacies. It may also have to be attuned to the Indian market, given that the average life span of an Indian male is in the 60-odd range. So having 62 as an entry barrier may need to be relooked. It may have to be aligned to the retirement age of 58 or 60.?

Adds Rajiv Agnihotri, senior business analyst, Propertiesindia.com, ?Reverse Mortgage will take some time (three to four years) to pick up as it is only one of the options available to senior citizens. But it cannot give the guarantee for all the requirements of the people at that stage. For example, rising inflation cannot be equaled with the rising real estate cost for the people who have bought houses in remote areas. Also, with less regulated and a more speculative real estate regime, the valuation of the house for reverse mortgage requires a lot of guidance. All these issues will take a number of years to get addressed. The best way to overcome the risks is by covering through insurance.?

But how beneficial is it for senior citizens? ?The product is tailor-made for senior citizens and aims to provide financial independence to the borrower when he ceases to earn a regular income. The mortgage is redeemed on the death of the borrower and/ or his spouse and thus ensures the security of residence for the senior citizens. There is no requirement to pay off the debt during the lifetime of the borrower,? says Deepak Aggarwal, VP (Commercial), Era Landmarks.

Corroborates Brijesh Bhanote, vice president (sales & marketing), Vipul Limited, ?The scheme is a boon for senior citizens as their property becomes a performing asset and it adds to their monthly income. Very rarely does any financial institution extend a loan to senior citizens.? Arindam Kumar Bardhan, GM, Mapsko Builders also feel that reverse mortgage will be a great turn for senior citizens, due to rising abuses by their siblings or relatives.

CHECKLIST

Five questions to ask on reverse mortgage:

* Is downsizing a better option?

Homeowners should seriously look at selling and moving as a way to tap a home?s equity. Those who do will sometimes find that they could get more for their home than they thought or that another living situation is more attractive.

* How long do you plan to stay in the house?

It doesn?t make sense for someone planning to move in, say, two years.

* Might other loans be better?

If the mortgage is being considered to supplement a rainy-day fund, it might be best to consider a line of credit that can be tapped when it is needed. If money is needed for a shorter period, a home-equity loan is a better choice.

* How much could you get from a reverse mortgage?

Consult a reverse mortgage specialist to view a summary of available options.

* When do you need the loan?

In addition to waiting for less-expensive products in the pipeline, homeowners are eligible for more, the older they are and the more their house is worth.