| Objective |
To provide
a source of additional income for senior
citizens who own self acquired House property
in India
|
| Eligibility |
| a |
No. of borrowers |
Single or jointly with spouse
in case of living spouse |
| b |
Age of the first borrower |
Above 60 years |
| c |
No. of surviving spouses on the date of
sanction of loan |
Should not be more than one. Borrowers
will have to give an undertaking that they
will not remarry during the currency of the
loan. If the borrower chooses to remarry,
the loan will be foreclosed. |
| d |
Age of the spouse |
Above 58 years |
| e |
Residence
|
Borrower should be staying at SELF ACQUIRED
and SELF OWNED house/flat against which loan
is being raised, as his permanent primary
residence.Proof of residence has to be provided. Affidavit made before the Executive Magistrate
may also be accepted as proof of residence. Borrowers will be required to inform
the Bank when they cease to use this residence as their permanent residence. |
| f |
Title of the
Property |
Borrowers should have clear and transferable
title in their names. The title verification
and search report for a period of 30 years
will be required to be obtained from the
Bank’s empanelled advocate at borrower’s
cost. |
| g |
Title of the
property and number of borrowers |
If the property is in single name and the
loan is availed jointly with spouse, the
borrower should make a Registered Will in
favour of the spouse. The Will should confirm
that this is the last Will and that it super
cedes all earlier Wills, if any. The borrower
to undertake that no fresh Will shall be
made during the currency of the loan. |
| h |
Encumbrances
|
The property should be free from any encumbrances. In
case the borrower has availed Housing loan
from SBM and the property is mortgaged
to SBM, the loan under Reverse Mortgage will
be considered subject to closure of housing
loan from the proceeds of the Reverse Mortgage. |
| i |
Residual life
of property |
Should be at least 20 years in case of
single borrower and 25 years in case of spouse
below the age of 60. |
|
| Security |
The loan will be
secured by way of Equitable Mortgage of residential
property. |
| Period |
Age of the younger
borrower
Between 58-68 years ---------------15 years
Above 68 years----------------------10 years
OR till death of the borrower(s) whichever is
earlier. |
| Disbursement |
Directly to the
joint account of the borrowers with E or S clause. |
| Periodicity
of availing loan |
1. Monthly/quarterly payment
2. Lump sum payment.
|
Quantum
of loan
|
The loan amount would be 90%
of the value of property. Loan amount would include
interest till maturity. The loan installment
payable to the borrower(s) would be as under
(for a loan amount of Rs.1 lac) (interest calculated
at 10.75% p.a.)
| Loan Tenor |
10 yrs |
11yrs |
12yrs |
13yrs |
14yrs |
15yrs |
| Monthly installments |
468 |
399 |
343 |
297 |
258 |
225 |
| Quarterly installments |
1423 |
1215 |
1045 |
905 |
787 |
687 |
| Lumsum payment |
34294 |
30813 |
27686 |
24876 |
22351 |
20083 |
Qualifying loan amount (90% of property value)
Rs.9 lacs
Tenor----------------15 years
Monthly installment Rs.225 X 9 = Rs.2025
Quarterly installment Rs.687 X 9 = Rs.6183
Quantum of monthly installment/quarterly installment
will change whenever there is change in the
rate of interest.
|
| Loan
amount |
Maximum Rs.1
crores
Minimum Rs.3 lacs |
| Purpose
of loan |
Supplementing income, any
personal expenses, house repairs etc. Loan amount
should not be used for speculative, trading and
business purpose. |
Rate
of interest
(fixed)
|
Public: 2.5% below SBMPLR
present rate will be 10.75%
Retired Staff: 3% below SBMPLR present rate will
be 10.25%
Interest rate to be reset every 5 years.
|
| Repayment
/ settlement |
The loan shall be liable for
foreclosure due to occurrence of the following
(events of default).
•
If the borrower(s) has/have not stayed in the
property for a continuous period of one year.
•
If the borrower(s) fail(s) to pay property taxes
or maintain and repair the residential property
or fail(s) to keep the home insured, the(Bank
reserves the right to insist on repayment of
loan by bringing the residential property to
sale and utilizing the sale proceeds to meet
the outstanding balance of principal and interest.)
• If borrower(s) declare himself/herself/themselves
bankrupt.
• If the residential property so mortgaged to
the Bank is donated or abandoned by the borrower(s).
•
If the borrower(s) effect changes in the residential
property that affect the security of the loan
for the lender. For e.g., renting out part
or all the house by creating a tenancy right,
adding a new owner to the house’s title;
changing the house’s zoning classification;
or creating further encumbrance on the property
either by way of taking a new debt against
the residential property or alienating the
interest by way of a gift or Will.
• Due to perpetration of fraud or misrepresentation
by the borrower(s).
• If the Government under statutory provisions,
seeks to acquire the residential property for
public use.
• Any other event such as re-marriage of the
borrower(s) etc which shall have an adverse
impact on the loan settlement prospects.
• Borrowers do not accept the revised terms on
revaluation of property and interest rates
at the end of every 5 years from date of sanction.
Any violation of the terms and conditions
of Reverse Mortgage loan.
|
| Pre
closure of loan |
The borrower(s)
will have option to repay the loan at any time
during the loan tenor.
There will be no pre closure penalty.
|
| Valuation
/ revaluation of property and option for the
Bank to adjust
payments. |
• After
the initial valuation to determine the loan amount,
subsequent revaluations should be done at intervals
of 5 years.
•
The Bank shall have the option to revise the
periodic amount every 5 years along with revaluation.
In the scenario of fall in property prices, the
Bank will revise the amount at any time earlier
than 5 years. At every stage of revision, it
should be ensured that the Loan to Value ratio
does not exceed 90% at maturity.
•
If the borrower does not accept the revised terms,
no further payments will be effected by the Bank.
Interest at the agreed rate before the review
will continue to accrue on the outstanding amount
of the loan. The accumulated principal and interest
shall become due and payable as mentioned in
clauses 11 and 12.
|
| Processing
fee |
0.50% of the
loan amount, maximum of Rs.10, 000. |
| Right
of rescission |
As a customer
friendly gesture and in keeping with international
best practices, after the documents have been
executed and loan transactions finalized, borrowers
will have the right to rescission within SEVEN
days to cancel the transaction. If the loan amount
has been disbursed, the entire loan amount will
need to be repaid by the borrower within this
period. However, interest for the period would
be waived. Processing fee shall not be refunded. |
| Insurance
and maintenance of house property |
• The house property will
be insured by the borrower at his cost against
fire, earthquake and other calamities.
•
The borrower shall ensure to pay all taxes, charges
etc.
•
Bank reserves the right to pay insurance premium,
taxes, charges etc. by reducing the loan amount
to that extent.
•
The borrower shall maintain the property in good
condition.
|
| Type
of facility |
Non renewable
overdraft without any ledger folio charges. No
cheque book/debit card will be linked to this
account. |
