National Housing Bank (NHB) is likely to launch 'reverse mortgage' in the current financial year to meet the financial needs of senior citizens. | |
| Reverse mortgage is a way to borrow against one's house to create a regular stream of income, and it is different from conventional loan. |
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| S Sridhar, chairman and managing director, NHB, said, "Reverse mortgage will enable a senior citizen to get a stream of income, for a maximum period of 15 years, by mortgaging his house to housing finance companies (HFC) or banks and will not be required to make repayment of loan as the amount will be recovered by selling the house after the person's death." |
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| NHB will be refinancing the banks and the HFCs involved in the reverse mortgage. |
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| "We are seeking Reserve Bank of India's approval for the same. Meanwhile, we are also talking to HFCs and banks through which the product would be offered," said Sridhar. The product was likely to be launched in the current financial year, he added. |
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| The additional money, after payment of the loan, was meant to be given back to the heir, Sridhar explained. |
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| Apart from providing refinance, "we will also be willing to take equity participation in HFCs, which are focused on funding rural housing", Sridhar said. |
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| The bank has set up a target to reduce housing shortage by 30 per cent in the next three years. |
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| He said, "NHB has a set target to catalyse institutional credit into housing sector up to Rs 75,000 crore in the next three years. Our aim is to create the environment wherein institutions may provide credit for catalysing 15 lakh houses, which will address shortage by 30 per cent." |
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| NHB is also planning to launch insurance-linked housing products that would be a combination of housing loans and ULIP. Meanwhile, NHB is working to develop NHB RESIDEX (national housing price index), which will be a prime indicator of valuation of house in cities. It would primarily be calculated for the major metros, Sridhar said. |
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| NHB is targeting a total disbursement of Rs 5,500 crore during July 2006-June 2007. |
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