CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

My age is 72 and my wife is 66 years old. I in­tend to avail re­verse mort­gage loan on my own home. The ti­tle deeds of the home are in my name. Please let me know whether the loan pro­ceeds of re­verse mort­gage loan can be used to buy a sec­ond home.

— Murli Joshi Re­versed mort­gage loans are ex­tended by sched­uled banks and hous­ing fi­nance com­pa­nies reg­is­tered with NHB. The re­verse mort­gage loan is se­cured by way of eq­ui­table mort­gage of res­i­den­tial prop­erty. For the loan you should be the owner of a self­ac­quired prop­erty with clear ti­tle in­di­cat­ing the own­er­ship of the prop­erty. The prop­erty can be house or a flat and should be in your own occupation. The res­i­den­tial prop­erty should be free from any en­cum­brances and the resid­ual life of the prop­erty should be at least equal to the ten­ure of the loan. You can avail this loan any­time af­ter you turn 60 years of age.

The loan is pro­vided through monthly/quar­terly/ half-yearly/an­nual dis­burse­ments or a lump sum or as a com­mit­ted line of credit or as a com­bi­na­tion of the three. The max­i­mum lump sum pay­ment can only be availed up to 50% of the to­tal el­i­gi­ble amount of loan re­stricted to ₹ 15 lakh. The lump­sum pay­ment can only be used for med­i­cal treat­ment for self, spouse and de­pen­dants, if any. So. it will not be pos­si­ble for you to get a lump sum loan to fund the pur­chase of an­other house. Also, you should think hard be­fore de­cid­ing to pur­chase a house af­ter tak­ing a loan at this stage of your life. The max­i­mum ten­ure of the re­verse mort­gage loan is 20 years. The amount of loan can un­dergo re­vi­sions based on re-val­u­a­tion of prop­erty at the dis­cre­tion of the lender. You and your spouse can con­tinue to use the res­i­den­tial prop­erty as your pri­mary res­i­dence till you are alive.

The scheme is in­tended to sup­ple­ment the cash flow of se­nior cit­i­zen af­ter re­tire­ment in case their monthly in­flow/in­come is not suf­fi­cient to cover their day-to-day ex­penses.

If any time dur­ing the loan ten­ure if you feel you can pre­pay the loan, you can ex­er­cise this op­tion.

I am 24 years old work­ing in the ma­rine sec­tor and plan­ning to buy land and con­struct a house on it. My bud­get is ₹ 30 lakh. What is the min­i­mum ini­tial amount that I need to in­vest?

— Thomas Fer­nan­des If you are plan­ning to self­con­struct a house on the same plot you can take a com­pos­ite loan. It will cover the cost of land and con­struc­tion. The lender nor­mally re­quires doc­u­ments for proof of in­come, iden­tity and res­i­dence for any loans. The lender will also in­sist for doc­u­ments re­lat­ing to ti­tle of the plot be­ing pur­chased. You will have to sub­mit an es­ti­mate of the to­tal cost of con­struc­tion, duly cer­ti­fied by an ar­chi­tect/civil en­gi­neer. While grant­ing the loan the lender will con­sider cost - which­ever is lower - of the plot or its cur­rent mar­ket value. You will have to start the con­struc­tion within a rea­son­able time af­ter pur­chase of the plot. The lender will de­ter­mine el­i­gi­bil­ity for home loan based on the to­tal cost com­prised of con­struc­tion cost and cost of the plot.

Your own con­tri­bu­tion which needs to be paid be­fore bank dis­burses any amount will have to be min­i­mum 20% of the cost of prop­erty in­clud­ing con­struc­tion. More­over, as per the guide­lines of RBI, the bank will not take into ac­count stamp duty and reg­is­tra­tion costs while cal­cu­lat­ing the cost of the prop­erty. There­fore, in ad­di­tion to 20% you will also have to fully fund the cost of stamp duty and reg­is­tra­tion charges.

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