Can you earn some money on the house you live? Will the reverse mortgages announced by Finance Minister P Chidambaram for senior citizens allow this to happen? What is the nitty-gritty involved in availing reverse mortgages that are so popular in advanced West European and US financial markets?

Read on to understand and avail the benefits of the scheme that will be implemented by banks and housing finance companies across the country shortly under the norms put together by the nodal agency, National Housing Bank (NHB). Foreign Direct Invetment is also getting dearer in India.

What is a reverse mortgage?

In simple terms, reverse mortgage is a loan against your home that you do not have to re-pay as long as you live in that place. Sounds interesting!

In para No 89 of the Union Budget Speech 2007-08, Finance Minister proposed that 'National Housing Bank' (NHB) will shortly introduce a novel financial product for senior citizens: a 'reverse mortgage' under which a senior citizen who is the owner of a house can avail of a monthly stream of income against the mortgage of his/her house, while remaining the owner and occupying the house throughout his/ her lifetime, without repayment or servicing of loan. The NHB has come up with draft operational guidelines for the same to banks in March 2007.

Punjab National Bank (PNB) has launched reverse mortgages in india after a very great sucess in western countries.Under this scheme senior citizens can avail loan along with interest upto Rs One crore against the house for at least 20 years. The interest rate would be 10% per annum. The margin of the bank would be 20 per cent.