This year's Union Budget recommended to implement Reverse Mortgage in India. Reverse mortgage makes it possible for a senior citizen to lend his house to a bank for which he will get monthly payments from the bank till he dies. He can live in the house till his death and on the event of his death the bank will get the ownership of the house. In a way Reverse Mortgage is the selling of a house to a financial institution for which the financial institution will pay the estimated value of the house in monthly installments. Thus it could be considered converse of a housing loan, hence the name Reverse Mortgage.
The monthly payments are based on the estimated value of the house (considering the age, locality etc. of the house) and the expected age of death of the person. For old people who own a house and don’t have anyone to take care of them or don’t have sufficient income of their own for their living, this is indeed a boon.
On the other side, banks will get to sell the house after the person’s death by which they will get their money back. Thus it’s a very good opportunity for them too. And we can already see banks running for the pie.
Few days back, I saw a cartoon in Mathrubhumi, the Malayalam daily, on which the daughter-in-law and grandchildren of an old couple is taking good care of them for fear that the old couple might reverse mortgage their house and hence there is a chance that the daughter-in-law would lose the house! Guess this would decrease the number of old-age homes in India. And the saas-bahu serials in TV channels would also come to an end soon.