n 2007, the finance minister of ndia introduced a

concept well-known and widely accepted in the West:

Reverse Mortgage.
REVERSE MORTGAGE: WHAT IS IT?
A reverse mortgage (or lifetime mortgage) is a
loan available to senior citizens. Reverse
mortgage, as its name suggests, is exactly
opposite of a typical mortgage, such as a home
loan.
HOW DOES IT WORK?
n a typical mortgage, you borrow money in lump sum right at
the beginning and then pay it back over a period of time
using Equated Monthly nstalments (EMs).
n reverse mortgage, you pledge a property you already own
(with no existing loan outstanding against it). The bank, in
turn, gives you a series of cash-flows for a fixed tenure.
These can be thought of as reverse EMs.
WHAT ARE THE FEATURES OF THIS LOAN?
The draft guidelines of reverse mortgage in ndia prepared
by the Reserve Bank of ndia:
Any Iouse owner over 6o yeurs oI uge Is eIIgIbIe Ior u reverse morLguge.
TIe muxImum Ioun Is up Lo 6o per cenL oI LIe vuIue oI LIe resIdenLIuI properLy
TIe revuIuuLIon oI LIe properLy Ius Lo be underLuken by LIe bunk or HC once
every yeurs
TIe umounL receIved LIrougI reverse morLguge Is consIdered us Ioun und noL
Income; Ience LIe sume wIII noL uLLrucL uny Lux IIubIIILy
TIe muxImum perIod oI properLy morLguge Is 1 yeurs wILI u bunk or HC
(IousIng IInunce compuny).
TIe borrower cun opL Ior u monLIIy, quurLerIy, unnuuI or Iump sum puymenLs
uL uny poInL, us per IIs dIscreLIon
How is the Ioan paid?
With a reverse home mortgage, no payments are made during the life of the
borrower(s). Since no payments are made during the term of the reverse home
mortgage loan, the loan balance rises over time.
n most areas where appreciation is good, the value of the home grows at a much
faster rate than the loan balance. Therefore, the remaining equity continues to
grow.
When the last borrower passes, or it is decided to sell the home and move, the
loan becomes due. The ownership of the home is then passed to the estate or
directed by a living will or will to the beneficiaries.
The beneficiaries now own the home and have to sell the home or pay off the loan.
f the home is sold, the reverse home mortgage lender is paid off and the
beneficiaries keep the remaining equity of the home.