DHFL Reverse Mortgage for senior citizens

Most people are familiar with concept of mortgage and view certain apprehension. After its literal French translation death pledge,’ as if to convey unsurety of repayment of the Now we have the concept of mortgage. As the name suggests, it’s a reversal of the mortgage concept.
Targeted at senior who have retired and are the age of 60, reverse mortgage an attempt to help those are ‘house rich’, but ‘cash While institutes like the second innings house, of ‘Munnabhai’ may not be accessible to everyone, through reverse mortgage, any senior citizen who owns may get a steady income putting the house on the line. this can be achieved by living his/her own house for the his/her life. first reverse mortgage in India is ‘Saksham’, launched by Dewan Housing Finance DHFL).
‘Saksham’ means and the scheme seeks to enable senior citizens who own but could do with some cash. The foremost requirement for this is that the person be over 60 years of age. he/she should own the ancestral or disputed property will not do. concept is quite simple and contrast to the normal mortgage a home loan, where one money upfront and then back in instalments. In the reverse mortgage, a team company visits the home assesses its appraised value, will be close to the current value. After assessing various factors, a loan to value ratio is arrived at. example, if the property is assessed to be worth Rs 20 lakh, the LTV is 75%. This means that 75% of the value of the property can be given out as loan, which is Rs 15 lakh.
The tenure of the loan can be decided by the customer, but has an upper limit of 15 years. So the person is paid this loan in instalments, decided by him/her. After the individual’s death, the house is taken into the company’s custody and it realises this loan value, along with the interest on it, by selling the house. However, if the individual’s wife outlives him, she can stay there for the rest of her life as well. (The same goes for the husband too). Also, if the applicant outlives the tenure of the loan, he/she can continue living there as long as he/she is alive, but he/she stops receiving the monthly instalments.
However, the interest keeps getting added to the loan amount. In case the value of the house appreciates during this tenure, the company pays the excess amount, after getting its loan and interest back, to the legal heir of the customer. Considering the above example, if a house worth Rs 20 lakh is worth Rs 25 lakh after 15 years, the balance — after the loan of Rs 15 lakh, along with its interest is deducted — is paid to the legal heir. The rate of interest at present is 12%.However, in case the property depreciates in value, the loan amount will be adjusted accordingly.
Reassessment procedures are conducted every three years. But company sources claim that a plan to not cut down the loan is in the pipeline. In a country that offers no social security, reverse mortgage is a positive step towards helping senior citizens. However, it should be kept in mind that the income one gets from this may not be substantial, unless one owns a very expensive house in a plum real estate locality. DHFL plans to launch the scheme in Mumbai initially and make it national in due course.

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