With an aim to make the reverse mortgage facility more attractive for senior citizens, the government has extended the period of the scheme from 20 years to the life of the person seeking funds from banks by pledging his residential property.
This has been done by amending the Reverse Mortgage Scheme, 2008, which enables a person above the age of 60 years to avail himself of periodical payments from a lender against the mortgage of his/her house while remaining the owner and occupying the house.
Earlier, the period of reverse mortgage loan was 20 years from the date of signing the agreement by the reverse mortgagor and the approved lending institution.
But, now the period has been extended to ‘the residual life time of the borrower,’ said a notification by the Central Board of Direct Taxes (CBDT). Persons availing themselves of the facility get certain income-tax benefits.
As per the scheme, on the borrower’s death or on the borrower leaving the house property permanently, the loan is repaid along with accumulated interest, through sale of the house property.