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Better health, sanitation and medical services have brought perceptible improvement
in the longevity with proportionately large increase in Senior Citizens category of
population. However, on account of high mobility for jobs, new social culture and
advent of nuclear family system, many of the Senior Citizens do not get support of
family members. In view of spiraling cost of good health care services and little social
security measures, the Senior Citizens are in very vulnerable position financially.
To tide over the problem of regular cash flow stream for supplementing pension/ other
income for addressing financial needs of the Senior Citizens, who need financial
support in their old age to lead remaining life respectfully, the Bank has launched
‘BARODA ASHRAY’, a reverse mortgage loan product.
The product will be available through identified Metro / urban / Semi-Urban branches
and Retail Loan Factories. Names of identified branches advised by various
Zones/Regions have been displayed on Bank’s website for information of the general
public /prospective customers.
1. Besides monthly annuity payments, provision is also being made for lump sum
payments to meet medical and other exigencies. It is advised that twenty percent
of eligible limit is earmarked for lump-sum payments over the entire tenure of the
loan for meeting medical and other exigencies.
3. The senior citizen borrowers will not be required to service the loan during their
lifetime and therefore, would not make monthly repayment of principle and interest.
5. In case loan is to be settled out of sale proceeds of the mortgaged property, surplus
amount if any, will be passed on to the legal heirs of the borrowers.
6. With the change in rate of interest/ or lump sum disbursement/ change in value of
the property (due to revaluation at the interval of every five years), the annuity
payable will be recomputed.
Product Profile : Baroda Ashray (Reverse Mortgage Loan)
Average life expectancy is around 80 years, hence, the annuity should be computed
considering residual life of borrower from his / her present age. For example, applicant’s
age at the time of request is 60 years, annuity will be computed for treating the loan
tenure of 20 years but initially loan would be granted for 15 years. If the borrower or his
/her spouse continue to live after 15 years, the term of the loan may be further
extended by 5 years. It will save the borrower and his / her spouse from hardship during
the days, when they would be in dire need of funds to survive and left with no other
alternative.
If Mr. A, aged 60 years, has a property valuing Rs. 20 lacs. The annuity will be computed
and paid every month as under:
Annuity based on value of property and tenure of loan (@11.00% p.a. for 20 years): Rs.
114/- per lac.
The scheme has an in built provision for lump-sum payment to borrower during the tenor
of facility to meet unforeseen genuine requirements. In case such request is received,
branch to ensure that the purpose for which lump-sum payment is sought is permissible
under the scheme. In such cases, advance value of the property is to be re-assessed
and annuity to be re-fixed depending upon the residual advance value of the
property, at current/latest valuation. The property to be revalued at the interval of
every 5 years and annuity to be re-fixed as per residual advance value available at
that point of time.
Illustration:
Suppose Mr. ‘A’ having residential property acquired by him and presently being used
as primary residence by him approaches the bank for availing the loan.
System of calculating EMI will be similar to that of EMI of any retail loan.