reverse mortgage lenders 2
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REVERSE MORTGAGE
LENDERSIN INDIA
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3
2
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NATIONAL HOUSING BANKS
DEWAN HOUSING FINANCE LIMITED
INDIAN BANK
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PUNJAB NATIONAL BANK
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STATE BANK OFINDIA
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CENTRAL
BANK
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ELIGIBLE BORROWERS
Should be Senior Citizen of Indiaabove 60 years of age
Should be the owner of aself- acquired.
The residential
property should befree from any encumbrances.
The residual life of the
property should be at least 20years.
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Determination of Eligible Amount of Loan
Market value of residential property
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The equity of the borrower in theresidential property (Equity toValue Ratio - EVR) does not at anytime during the tenor of the loanfall below 10%.
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Up gradation, renovation and extensionof residential property.
Home improvement,maintenance/insurance of residentialproperty.
Medical, emergency expenditure for maintenance of family
For supplementing pension/other income
Eligible End use of
funds
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Circle rateof a
property
Appraisalvalue of aproperty
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MarketValue of a property
Appraisalvalue of a property
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Th elongitivity
andstructuralviability
Appraisalvalue of a property
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Maintenanceof theproperty
Appraisalvalue of a property
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Appraisalvalue of a property
Infrastructureand amenities provided
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CivilEngineering
parameters
Appraisalvalue of a property
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N ot at t h esame levelAppraisalvalue of a property
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First issue:Mortgage of property for obtaining a loan is transfer within
the meaning of the Income-tax Act.Transfer within the meaning of the Transfer of Properties
Act includes some types of mortgage.
Clause (xvi) in section 47 of theIncome-tax Act, 1961 has been inserted toprovide that any transfer of a capital asset ina transaction of reverse mortgage, made andnotified by the Central Government shall not be regarded as a transfer.
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S econd issue:The loan, either in lump sum or in instalment, received
under a reverse mortgage scheme amounts to income.
Any amount received by an individual as a loan, either in
lump-sum or in instalment, in atransaction of reverse mortgagereferred to in clause (xvi) of Section47 of the Income-tax act shall not beincluded in total income.
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R everse mortgage is popular in western countries. R everse Mortgage has not yet met with success in India. The reasons
for this are social, rather than financial. In the Indian society,
the residential house is invested with a lot of emotions and sentiments.As per our societal norms, very often children choose to stay with their parents. As such, the senior citizens become almost duty-bound toretain the ownership of the house.
All these facts when combinedtogether weaken the case for reversemortgage in India.
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Y et, a beginning seems to have been made. As of yet, most of the customers who are opting for reverse mortgage in India belong to the upper-
middle class, who have a self-owned house, andtheir children are employed and settled elsewhere.
W ith the passage of time, we are likely to seemore people going for the option of the reversemortgage.
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