State Bank of Mysore

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Reverse Mortgage Scheme

Reverse Mortgage Scheme - To provide a source of additional income for senior citizens whoown self acquired House property in India.

Highlights of Reverse Mortgage Scheme

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.

 

Contact your nearest Branch of State Bank of Mysore or

Chief Manager
State Bank of Mysore
Personal & Services Banking Department
H .O.: K.G.Road, Bangalore - 560 009, INDIA
Phone: 91 80 22353901 to 22353909 ; 22353473.extn.380
91 80 22353467 Fax: 91 80 22283684
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State Bank of Mysore,
H .O.: K.G.Road,
Bangalore - 560254, INDIA.
Phone: 91 80 22353901 to 22353909 ; 22353473.
Fax: 91 80 22283684

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