The housing finance regulator, National Housing Bank (NHB), is in talks with at least two life insurance companies to extend the tenure of payment for reverse mortgage products for the lifetime from the currently available period of 20 years post retirement.
?The idea was to make the product, which was launched by NHB one and half years ago, more popular,?? said S Sridhar, chairman and managing director, NHB.
Right now the product was available for the senior citizens that have crossed the age of 60 years and the maximum tenure was for 20 years post retirement.
Talking to reporters on the sidelines of the announcement of NHB?s partnering with Harmony for Silvers Foundation to promote reverse mortgage loan for senior citizens in Mumbai Sridhar said, ?We are in talks with a couple of life insurance companies in the country to own the longevity risk for those senior citizens that have opted for the product for lifetime. In fact, we are coming with a solution to make the reverse mortgage product available until the period as chosen by the senior citizen, which may go up to the lifetime, said Sridhar. We now feel the outlines of the reverse mortgage annuity products, which will be made available in couple of months, added Sridhar.
Despite its potential to empower the elderly, there have been few takers for reverse mortgage as concerns on aspects like property valuation, interest and taxation, and a traditional Indian mindset prevent many from using one’s home as an equity tool. On the size of the of disbursement of reverse mortgage loans, Sridhar said that 2000 such loans have been sanctioned, worth about Rs 550 crore by the banks so far.
?Traditionally,Indians are extremely emotionally attached to the assets they create in their lifetime,? said Tina Ambani, chairperson, Harmony for Silvers Foundation. ?We want to generate awareness about this novel financial product, which allows seniors to continue to live in their house that’s probably the only investment of their life, and at the same time get financial aid in the form of a loan that they don’t even need to repay, added Ambani.
She launched a special helpline to assist senior citizens wanting to avail reverse mortgage loans.
Expressing happiness over the exemption of the product from income tax by the central board of direct taxes (CBDT) during the announcement of annual budget early this year, Sridhar hoped that the banks would come forward to lower their interest rates for the reverse mortgage product which would be brought down by the banks even further after the recent host of measures as taken by the government.