LIC Housing to enter reverse mortgage

LIC Housing Finance will launch a reverse mortgage product within a month, S K Mitter, director and chief executive, said here on Tuesday. 

 

The product has already been developed and covers senior citizens. Under reverse mortgage, a company offers loan assistance to senior citizens by mortgaging their houses, informs the Business Standard. 

 

Clients between the age of 60 and 65 will be given 40 per cent of the value of their houses as loan and those up to 75 years will be given 60 per cent. The maximum tenure of the loan will be 15 years, Mitter said. 

 

The National Housing Bank (NHB), the principal agency for promoting housing finance institutions in the country, is considering a proposal to set up a mortgage guarantee company to provide an insurance cover for the reverse mortgage loans in the eventuality of death of the loan taker. 

 

This move will further help promote the reverse mortgage product in the country, Mitter said at a press conference. 

 

The heirs can either retain the property by paying the remaining installments, or choose to forfeit the same to the company. Urban migration and the resultant nuclear families have created a promising market for the new segment, he added. 

 

The union finance minister P Chidambaram had announced the launch of the reverse mortgage scheme in this year's budget, to financially empower the senior citizens. 

 

Responding to a question, Mitter said the company might think of starting its own venture fund in the next two years. The company aims to sanction housing loans to the tune of Rs 8,060 crore and will disburse Rs 7,385 crore during the current financial year. It proposes to raise Rs 1,000 crore through fixed deposits during the current year to partly fund its business.