Reverse Mortgage in IDBI BANKIDBI Bank introduces Reverse Mortgage Loan for senior citizens. Senior Citizens are an imperial component of the Indian society. There is significant increase in cost of good health care facilities along with little social security. Senior Citizens require a regular cash flow stream for supplementing pension/other income and addressing their financial needs. Reverse Mortgage seeks to monetize the house as an asset and specifically the owner’s equity in the house. The scheme involves the Senior Citizen borrower(s) mortgaging the house property to IDBI Bank, in return of periodic payments to the borrower(s) during the latter’s lifetime to help them in sustaining themselves .The senior citizen borrower is not required to service the loan during his lifetime and therefore does not make monthly repayment to the Bank. RML facility can be extended to senior citizen borrowers owning inherited property provided the property has a clear title.

Advantages

Maximum Funding Services at doorstep Simple documentation Personalized services Attractive rate of interest

Features

Eligibility - The residential house/flat owner, who is resident of India, of the age of 60 years & above, is eligible to raise the loan under this Scheme.

Tenor - The maximum tenor of the loan shall be upto 20 years, which will be subject to age of the borrower.

Loan Amount - The minimum loan amount is Rs. 5 lacs and the maximum loan amount is Rs.2.00 crore. The quantum of loan will be 60% to 80% of the assessed value of property, which will depend upon the age of the borrower.

Disbursement - Periodic payments (monthly, quarterly, half yearly, annually) to be decided mutually between the Bank and the borrower. The maximum monthly payments shall be capped at Rs. 50000/-. Payment of lump sum amount for medical treatment for self, spouse and dependents can be considered, which is restricted to 50% of the total eligible loan amount , subject to a cap of Rs. 15 lacs.

Repayment of loan - Outstanding loan (principal + interest) amount shall become due and payable 6 months after the death of the last surviving borrower/spouse or the borrower permanently move out of the property, whichever is earlier. Settlement of loan along with interest is to be met out of the proceeds received from sale of residential

property. The borrowers or his /her legal heirs shall be provided with the first option to settle the loan along with interest without sale of property.

Security- Equitable mortgage of property by way of deposit of original title deeds. Prepayment/foreclosure - The borrower(s) will have option to prepay the loan at any

time during the loan tenor. There will not be any prepayment levy/penalty/charge for such prepayments.

Right of Rescission - After the loan is sanctioned senior citizen borrower(s) shall be given up to 10 days time to re-look into his requirements and if he so wishes to cancel the transaction for any reason whatsoever.

Applying for a Reverse Mortgage Loan against Home is absolutely simple. Just call our Phone Banking numbers or Visit our nearest Retail Asset Centre/Branch. Our representative will contact you at the earliest.

Baroda Ashray (Reverse Mortgage Loan)

Purpose:

For supplementing the cash flow stream of senior citizens in order to address their financial needs.

Eligibility:

Should be Senior Citizen of India, above 60 years of age.

Married couples will be eligible as joint borrowers provided one of them is above 60 years of age and age of spouse is not below 55 years at the time of application.

Should be the owner of a residential property (house or flat) located in India in his/her own name.

Residential property should be used as permanent primary residence (fully self occupied property).

The Commercial property will not be taken as a security under the product.

Maximum Amount:

The maximum loan amount inclusive of interest for entire tenure of the loan shall be restricted to Rs. 1 crore subject to value of the property.

Option to adjust payments:

The Bank shall have the option to revise periodic annuity amount, if lump-sum payment is taken or at the interval of every 5 years based on valuation of the property.

Repayment of Loan:

The loan shall become due and payable when the last surviving borrower dies or would like to sell the home / permanently moves out of the home for aged care to an institution or relatives. The loan will, as such, become due for recovery and payable.

Settlement of loan, along with accumulated interest, to be met by the proceeds received out of sale of residential property.

The borrower(s) or his/her/their estate shall be provided with the first right to settle the loan along with accumulated interest, without sale of property. A reasonable period of 2 months may be provided when repayment is triggered, for house to be sold.

Security:

Simple / Equitable mortgage of the Residential property.

Tenure:

15 years. The tenure may further be extended till survival of the borrower/s subject to advance value of the property.

Insurance:

Insurance of the residential property mortgaged to the bank shall be regularly taken. The premium charges are to be borne by borrower.

The product is available at selected branches. Please click here for details of branches

Housing corporation of india

Reverse Mortgage Loan (RML) enables a Senior Citizen i.e. above the age of 60 years to avail of periodical payments from a lender against the mortgage of his/her house while remaining the owner

and occupying the house.

The Senior Citizen borrower is not required to service the loan during his/her lifetime and therefore does not make monthly repayments of principal and interest to the lender.

RMLs are extended by Primary Lending Institutions (PLIs) viz. Scheduled Banks and Housing Finance Companies (HFCs) registered with NHB.

The loan amount is dependent on the value of house property as assessed by the lender, age of the borrower(s) and prevalent interest rate.

The loan can be provided through monthly/quarterly/half-yearly/annual disbursements or a lump-sum or as a committed line of credit or as a combination of the three.

The maximum period of the loan is 20 years. (The maximum period over which the payments can be made to the reverse mortgage borrower).

The loan amount may be used by the Senior Citizen borrower for varied purposes including up-gradation/ renovation of residential property, medical exigencies, etc. However, use of RML for speculative, trading and business purposes is not permissible.

Valuation of the residential property would be done at such frequency and intervals as decided by the reverse mortgage lender, which in any case shall be at least once every five years.

The quantum of loan may undergo revisions based on such re-valuation of property at the discretion of the lender.

The borrower(s) will continue to use the residential property as his/her/their primary residence till he/she/they is/are alive, or permanently move out of the property, or cease to use the property as permanent primary residence.

The lender will have limited recourse i.e. only to the

mortgaged property in respect of the RML extended to the borrower.

All reverse mortgage loan products are expected to carry a clear and transparent ‘no negative equity’ or ‘non-recourse’ guarantee. That is, the Borrower(s) will never owe more than the net realizable value of their property, provided the terms and conditions of the loan have been met.

On the borrower’s death or on the borrower leaving the house property permanently, the loan is repaid along with accumulated interest, through sale of the house property.

The borrower(s)/heir(s) can also repay the loan with accumulated interest and have the mortgage released without resorting to sale of the property.

The borrower(s) or his/her heirs also have the option of prepaying the loan at any time during the loan tenor or later, without any prepayment levy.

Taxation Issues

The Finance Minister, in paragraph 89 of his speech, while presenting the Union Budget, 2007-

08, had announced that the National Housing Bank (NHB) will introduce a reverse mortgage

scheme for senior citizens.

In the context of the aforesaid scheme, it was necessary to resolve the tax issues arising there-

from. The first issue is whether mortgage of property for obtaining a loan under the reverse

mortgage scheme is transfer within the meaning of the Income-tax Act thereby giving rise to

capital gains. Section 2(47) of the Income-tax Act provides an inclusive definition of ‘transfer’.

Further, ‘transfer’ within the meaning of the Transfer of Properties Act includes some types of

mortgage. Therefore, a mortgage of property, in certain cases, is a transfer within the meaning

of section 2(47) of the Income-tax Act. Consequently, any gain arising upon mortgage of a

property may give rise to capital gains under section 45 of the Income-tax Act. However, in the

context of a reverse mortgage, the intention is to secure a stream of cash flow against the

mortgage of a residential house and not to alienate the property.

A new clause (xvi) in section 47 of the Income-tax Act, 1961 has been inserted to provide that

any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and

notified by the Central Government shall not be regarded as a transfer.

The second issue is whether the loan, either in lump sum or in instalment, received under a

reverse mortgage scheme amounts to income. Receipt of such loan is in the nature of a capital

receipt. Section 10 of the Income tax Act, 1961 has been amended to provide that any amount

received by an individual as a loan, either in lump-sum or in installment, in a transaction of

reverse mortgage referred to in clause (xvi) of Section 47 of the Income-tax act shall not be

included in total income.

A borrower, under a reverse mortgage scheme, shall, however, be liable to income tax (in the

nature of tax on capital gains) only at the point of alienation of the mortgaged property by the

mortgagee for the purposes of recovering the loan.

Eligibility Senior Citizens above 60 years, including retired staff of our Bank. Married couples will

be eligible as joint borrowers for financial assistance provided. They should be the owner of a self acquired residential

property with absolute, clear title/conveyance and self occupied and it should be the principal residential property. The prop

erty should be free from encumbrance and the house/flat to be located in India. However, inherited residential property if it

is devolved on partition or owing to being the sole legal heir also can be accepted provided the title of the property is free

from any encumbrance. The residual life of property should be more than 20 years.

Amount of Loan The amount of loan will depend on re

alizable value of the residential property as assessed by the Bank. The realizable value of the property is calculated at

10% less than the Market Value assessed by Bank’s Panel Engineer. Maximum loan amount: Rs.40 lakh. Loan will

be disbursed by Bank on regular monthly terms as annuity. Lump sum up to 20% of the eligible loan amount should be cons

idered only if the amount is meant for utilization for meeting medical expenses of the Reverse Mortgage Loan Applicant/s.

The maximum eligible lumpsum is restricted to Rs.15 lakhs. Revaluation of property to be done once in 3 years and int

erest rate will be reset once in 5 years. Periodic monthly payments will be based on such revaluation and the Loan to Asse

t Value shall be based on such revaluation. Borrowers consent for this will be obtained upfront.

Margin 61% on the realizable valu

e of property.

Processing fee

* NIL for existing customers.* Rs. 285/- per lakh for others.

Repayment * 15 years, with a provision to roll over, in case of ne

ed, after revaluation* Fresh terms, as at the time of rollover, shall be applicable.

Security Mortgage of residential property in favo

ur of Bank Bank reserves the right to seek additional collaterals Commercial property will not be eligible for Rev

erse Mortgage Loan {Equitable Mortgage to be registered (at Applicant’s cost) if there is a provision for the same in the State

where property is located }

Documents to be submitted for processing the application 1. Completed Application Form with passport size photograph.2. PAN Card copy.3. Proof

of residence such as Recent Telephone Bill / Electricity Bill / Property Tax Receipt / Passport / Voter’s ID.4. List of le

gal heirs with name, age, address etc.5. Sale Deed.6. Approved Building Plan.7. Title Deed Documents for 30 years.

8. Proof of title in the Revenue Records.(Legal Opinion from Advocate & Valuation of property from Engineer will be

arranged by Bank at applicant’s cost).

Salient Features Loan to meet Medical , emergency expenditure for maintenance of family For

supplementing pension / other income Meeting any other genuine need (Speculative, trading purposes shall not be perm

itted)

Insurance Property (offered as security) to be insured at borrower’s cost with Bank clause against fire, flood, earthquake, riot

and other risks, which are normally covered by insurance companies.

Other terms and conditions 1. The loan amount need not be repaid during th

e lifetime of the borrower / spouse. The borrower / spouse can continue to stay in their home during their lifetime. 2.

The option of pre-payment is available, without pre-payment charges