A mortgage to reverse autumnal low of elders

While better living conditions, improved medication and advancing science have all helped in improving life expectancy of human beings, it is also true that the growing healthcare cost is leaving elderly people in a tricky situation.

In a bid to encourage the elders  to be independent and address their financial needs, the National Housing Bank and Central Bank of India have introduced a revised version of the Reverse Mortgage Loan Scheme.

Officials  of the two banks explained the scheme to the targeted beneficiaries at a workshop in Bangalore on Wednesday.
Reverse mortgage is a mortgage loan for senior citizens who are not eligible for any other forms of mortgage loans.

Under the scheme, the lender makes regular payments to the borrower. The payment stream is reversed as compared to the conventional mortgage.

If the borrower dies or decides to leave the property permanently, the loan is repaid along with the accumulated interest through the sale of the property. On adjusting the principal amount of the loan and accumulated interest, if there is a surplus, it will go to the estate of the deceased. The heir of the borrower can repay the loan with the accumulated interest and get the mortgage released without having to resort to selling the property.

Dr Radha S Murthy, founder and managing trustee of Nightingale Centre for Ageing and Alzheimer’s, said though the scheme was beneficial to the aged, it was relatively new in India and was not yet popular. “Even though many old people may have been abandoned by their children and are struggling financially, they would rather save their property, even at the cost of a comfortable life. This perspective needs to change,” she explained.

Sanjeev Srivastava of the National Housing Bank agreed that it was not easy to convince elderly people to go in for this scheme. “The challenge lies in changing the mindset of old people and making them understand that this will only stand them in good stead in future,” he said.

The problem arises from the fact that a majority of the elderly people do not have a regular source of income.  “If they avail of this scheme, they can live with dignity, without having to depend on anyone,” said S Premkumar Raja, secretary and trustee of Nightingale Medical Trust.

A senior citizen who has availed of the scheme confessed that he did feel a sense of independence. Speaking on condition of anonymity, he said: “I took the decision of availing the reverse mortgage loan and I now receive a monthly income which takes care of all my expenses. I would recommend this to all those who want to provide for their own needs.”

But there are some who are sceptical about the scheme. Shiv Kumar, an advocate and convener of the elders’ helpline, was doubtful of the scheme’s viability.

“First of all, the kind of documents  that the banks ask for are very complicated for the elderly to produce. Added to this, the entire procedure is bureaucratic in nature and not user-friendly. The amount of money that is given every month is fixed. In a particular month, a person may require more, either for emergencies or other personal needs. But the scheme has no provision for such a situation,” he said.