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Our Bureau

Mumbai, Oct. 10 State Bank of India is launching a reverse mortgage loan for senior citizens, starting from October 12. Called the “SBI Reverse Mortgage Loan”, it will be available for customers above 60 years.

The loan would be given jointly if the spouse is alive, provided he or she is above 58 years.

The loan is available at all SBI branches. It carries a fixed interest rate of 10.75 per cent per annum, which is subject to reset at the end of every five years along with revaluation of security and re-adjustment of loan instalments, if necessary.

There is no upper limit for the amount of loan a customer can avail under this scheme. The maximum tenure of such a loan is 15 years, said Mr Sangeet Shukla, Chief General Manager, Personal Banking, SBI.

Other players in this segment include DHFL and Punjab National Bank.

Reverse mortgage loan is a relatively new concept in India. Under this scheme borrowers can avail loans using their homes as collateral security. They can opt for a lumpsum payment at the beginning or monthly or quarterly payments.

The borrowers need not repay the loan during their lifetime and can also continue to stay in their houses during their lifetime. Thereafter, the legal heirs have the option to repay the bank loan and redeem the property. If not, the bank will sell the property and liquidate the loan. Any surplus amount would be passed onto the heirs.

More Stories on : Mortgage | New Products & Services | State Bank of India | Public Sector Banks

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