LIC Housing Finance Ltd., has a scheme called for "Griha Arjan" for Senior Citizens. The objective of the scheme is to provide a source of additional income to the resident Senior Citizens, above 60 years, who own self-acquired and self- occupied House property in India. The purpose of the loan is to supplement their income for any personal expense, house repairs, to pay any existing liability, etc. The borrower can be single or co-borrower with his spouse. The property should be free from encumbrance i.e. the borrower should be having a clear, and marketable title in his name. The residual life of the property should be at least 20 years.
The Reverse Mortgage loan will be secured by way of registered mortgage of the residential property. The term under this scheme is maximum 15 years. The upfront fees will be 1% of the loan amount. The maximum loan amount shall be restricted to Rs.50lakhs. The minimum loan amount will1 be Rs1.0lakhs. The loan can be availed through monthly payments / lump sum payments / combination of both. The maximum loan balance would be restricted to 90% of the value of Property at any point of time during loan tenure. Loan balance would include interest till maturity. The loan amount will depend upon value of property, age of the borrower, rate of interest etc. Initial valuation of the property would be done to determine the loan amount and subsequent revaluations will be done at intervals of5 years.
The Company shall have the option to revise the periodic / lump sum amount every 5 years. If the borrower does not accept the revised terms, no further payments will be effected by the company. Interest at the rate agreed before the review will continue to accrue on the outstanding amount of loan. The loan shall become due and payable only when the last surviving borrower dies or opts to Sell The Home, or permanently moves out of the home which is mortgaged. In case the borrower moves out of the residence, he/she will be required to inform LICHFL. The loan shall be liable for foreclosure due to occurrence of the following events:
a) If the borrower(s) has/have not stayed in the property for a continuous period of one year;
b) If the borrower(s) fail(s) to pay property taxes or maintains and repair the residential property or fail(s) to keep the home insured. The LICHFL reserves the right to realize the amount due by bringing the property to sale and utilizing the sale proceeds to meet the outstanding balance of principal and interest;
c) If the borrower(s) declares himself / herself bankrupt;.
d)If the residential property mortgaged is donated or abandoned by the borrower(s);
e)If the borrower(s) effects changes in the residential property that affect the security of the loan.
f) Due to perpetration of fraud or misrepresentation by the borrower( s);
g) If the government under statutory provisions, acquires the residential property for public use;
h) If the government condemns the residential property;
i) If the borrowers do not accept the revised terms on revaluation of the property and interest reset at the end of every 5 years of sanction;
j) If there is any violation of terms and conditions of REVERSE MORTGAGE LOAN.
The settlement of the dues (loan along with accumulated interest) would be either met by sale proceeds of the mortgaged residential property or through repayment by borrower and his legal heir. The borrower(s) or his / her / their Legal Heirs / estate shall be provided with the first right to settle the loan along with accumulated interest. The balance surplus remaining after settlement of loan along with accumulated interest, through sales proceeds would be passed on to the borrower or his legal heirs. The borrowers will be required to submit Annual Survival Certificates in the month of November every year, which includes clauses regarding marital status and permanent residence of the borrowers. A list of legal heirs will be obtained at the time of sanction of loan and specific instructions of loan and about inheritance of the property and payment of balance amount, if any, from out of the sale proceeds. The borrower will have the option to repay the loan at any time during loan tenure. There will be no prepayment penalty.
The house property will be insured by the borrower at his cost against fire, earthquake and other calamities. The borrower shall ensure that payment of all the taxes, charges etc. LICHFL 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.
After the documents have been executed and loan transaction finalized, the Senior Citizen shall be given up to 15 days time to cancel the transaction, for any reason what so-ever. If the loan has been disbursed the entire loan amount will need to be paid by the Senior Citizen borrower within this period.
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