Now, home 'pension' for elders

Dewan Housing launches reverse mortgage for senior citizens.

Now a product that allows senior citizens to make a residential property earn for them while they continue to live. That's possible through a "reverse mortgage" whereby a housing finance company provides a fixed sum to the owner based on the value of a property for a certain period.

Dewan Housing Finance Corporation Limited (DHF), a mortgage lender to the lower and middle income segment, is the first to launch a reverse mortgage product in the market, following issue of regulations a few months ago by National Housing Bank (NHB), the regulator of housing finance companies.

Reverse mortgage provides a regular source of income for senior citizens for 15-20 years. The amount is paid every month to the owner of a property and the interest there on is recovered from the sale of the property after the death of the owner and his/her spouse.

The difference between the sale price and the amount due to DHFL is passed on to the legal heirs of the borrower. The rate of interest on reverse mortgage is 12 per cent, said Shivkumar Mani, head -marketing at DHFL.

The DHFL scheme, called 'Saksham', is meant to provide and supplement monthly income for senior citizens. It is offered to retired people above the age of 60 years who own property and have been living in it for at least one year.

Saksham gives liberty to the customer and his/her spouse for maintaining and living in the property as long as they are alive, without the fear of having to vacate the property even after the tenure of the reverse mortgage expires.

Saksham gives the option to the legal heir to re-possess the property if intended after the demise of both the customer and his/her spouse.

Mani said "this unique scheme is designed to help senior citizens to sustain their lifestyle and also help them maintain their monthly expenditure without being dependent on anyone. It is a social security scheme designed to benefit the senior citizens post retirement."

Mani said DHFL will first launch Saksham in Mumbai and its adjoining areas, and in a short period of time, will offer this scheme across major cities and towns.

For a property worth Rs 20 lakh, a 65-year-old would get Rs 4,100 per month for 10 years. After adding up interest, the amount payable to DHFL would be around Rs 10 lakh at the end of the tenure of the reverse mortgage.

DHFL would take possession of the property only after both the borrower and his/her spouse have expired and but interest accumulation would continue till the dues to the company are cleared through sale of the property.