Making a budgetary announcement for an innovative instrument in the housing loan market, the Union finance minister(FM)P Chidambaram said that the National Housing Bank (NHB) would be introducing reverse mortgage.

A reverse mortgage is an instrument wherein a senior citizen who is an owner of a house can avail of a monthly stream of income against mortgage of his or her house, while remaining the owner and occupying the house throughout his or her lifetime, without repayment or servicing of the loan.

S Sridhar, chairman & managing director, NHB, said, “Reserve mortgage as a product, might hit the market in a short span of one or two months. The NHB would be guaranteeing the obligation by banks and housing finance companies towards senior citizens.”

According to an analyst, it is expected that reverse mortgage would attract around Rs 5,000 crore in two years.

SK Mitter, CEO, LIC Housing Finance,said, “There is an immense potential that needs to be tapped.”

Setting up mortgage guarantee firms would aid housing finance firms to tap the hinterland and cut cost of funds.”