SBI RML scheme provide a source of additional income for senior citizens of India who own self-acquired and self-occupied house property in India. It can be utilized as supplementing income, any personal expenses, house repairs, etc. Loan amount should not be used for speculative, trading and business purposes.
Eligibility of SBI Reverse Mortgage Loan
- No. of borrowers: Single or jointly with spouse in case of a living spouse.
- Age of first borrower: Above 60 years
- 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 borrowers choose to remarry, the loan will be foreclosed.
- Age of spouse: Above 58 years
- Residence: *Borrower should be staying at self-acquired and self owned house /flat against which loan is being raised, as his permanent primary residence.
- (*Mobile/Telephone/Credit Card bills/ Certificate from the Housing Society where the borrower is staying / Affidavit made before the Executive Magistrate may 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.)
- Title of the Property: Borrowers should have a clear and transferable title in their names. Title verification and search report for a period of 30 years will be required to be obtained from the Bank’s empaneled advocate at borrowers’ cost.
- Title of the property and number of borrowers: Case– Title in single name and loan availed jointly with spouse. Title holder should make a Will in favour of the other spouse. The Will should confirm that this is the last Will and that it supersedes all earlier Wills, if any. The borrower to undertake that no fresh Will shall be made during the currency of the loan.
- Encumbrances: The property should be free from any encumbrances. However in case of property purchased by availing Home Loan from SBI and mortgaged to SBI, it will be considered for RML, subject to closure of the Home Loan account out of the proceeds of RML.
- Residual Life of property: Should be at least 20 years in case of single borrower and 25 years in case of spouse being below 60 years of age. Certificate from empaneled engineer/architect will be required to be obtained for this purpose, in addition to valuation of property.
Security of SBI Reverse Mortgage Loan
The RML shall be secured by way of equitable mortgage of residential property.
Tenor of SBI Reverse Mortgage Loan
- Age of the younger of the borrowers between 58 and upto 68 years: 15 years
- Age of the younger of the borrowers above 68years: 10 years OR till death of the borrower(s), whichever is earlier.
Disbursement of SBI Reverse Mortgage Loan
By credit to an SB account in the joint names of the borrowers operated by E or S.
Periodicity of availing loan
- Monthly / quarterly payments
- Lumpsum payment
Quantum of SBI Reverse Mortgage Loan Amount
The loan amount would be 90% of the value of property. Loan amount would include interest till maturity. The loan instalments payable to the borrower(s) would be as under for a loan amount of Rs.1 lac (at interest rate of 10.75% p.a.):
|Loan Tenor (years)||10||15|
|Monthly instalments (Rs.)||468||225|
|Quarterly installments (Rs.)||1,423||687|
|Lumpsum payment (Rs.)||36,022||21,619|
The maximum loan amount is kept at Rs.1 Crore (monthly payment Rs.22,500/- for 15 years) and minimum Rs.3 lacs (monthly payment Rs.675/- for 15 years).
Example of arriving at the monthly instalments: Property value:Rs.10 lacs
Qualifying loan amount (90% of property value: Rs.9 lacs
Tenor: 15 years
Monthly instalment: Rs. 225 x 9 = Rs.2,025/-
How to Calculate Instalment Amount in Reverse Mortgage Loan (Find RML Instalments)
Repayment / Settlement of SBI Reverse Mortgage 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 for to an institution or to relatives. Typically, a "permanent move" may generally mean that neither the borrower nor any other co-borrower has lived in the house continuously for one year or do not intend to live continuously. Bank may obtain such documentary evidence as may be deemed appropriate for the purpose.
- Settlement of loan along with accumulated interest is to be met by the proceeds received out of sale of residential property or prepayment by borrowers and his next of kin.
- 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, without sale of property.
- A reasonable amount of time, say up to 6 months, may be provided when RML repayment is triggered, for house to be sold.
- The balance surplus (if any), remaining after settlement of the loan with accrued interest and expenses, shall be passed on to the borrower or the estate of the borrower/legal heirs.
- Borrowers will be required to submit annual life certificates in the month of November every year. This certificate will also include clauses regarding marital status, and permanent residence of the borrowers, in addition to the balance confirmation as on 31st October of that year.
- List of legal heirs will be obtained at the time of sanction of loan. With a view to avoiding disputes at the time of settlement of loan amount by legal heirs, specific instructions about inheritance of the property and payment of balance amount, if any, of the sale proceeds after settling the Bank’s dues, will be required to be part of the borrowers’ Will.
Foreclosure of SBI Reverse Mortgage Loan
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 example: renting out part or all of 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 out new debt against the residential property or alienating the interest by way ofa 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.
- If the government condemns the residential property (for example, for health or safety reasons).
- 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 reset at the end of every 5 years from sanction.
- Any violation of the terms and conditions of RML.
Pre-payment of SBI Reverse Mortgage Loan
- The borrower(s) will have option to prepay the loan at any time during the loan tenor.
- There will be no prepayment penalty.
Valuation/Revaluation of property and option for the Bank to adjust payments of SBI Reverse Mortgage Loan:
- After the initial valuation to determine the loan amount, subsequent revaluations will be done at intervals of 5 years.
- The Bank shall have the option to revise the periodic/lump-sum amount every 5 years along with revaluation. In the scenario of fall in property prices, the Bank may decide to 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 rate agreed 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 9 and 10.
Processing fee of SBI Reverse Mortgage Loan
0.50% of the loan amount, minimum Rs.500/- and 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 transaction finalized, borrowers will have right of rescission up to 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 may be waived. Processing fee shall not be refunded in such cases.
Insurance and maintenance of house property of SBI Reverse Mortgage Loan
- 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.
Operational issues of SBI Reverse Mortgage Loan
- Type of facility: Non-renewable Overdraft without ledger folio charges. No cheque book / debit card will be linked to this account.
- Availability of product: All branches.