chennai with the recent announcement of the annuity component in the reverse mortgage rm scheme becoming taxfree making the disbursement lifelong instead of the earlier 20year limit and allowing insurers to participate in the scheme are all expected to infuse more life into the product reverse mortgage involves senior citizens mortgaging their property to a lender who then makes periodic payment to the borrowers the borrower is not required to service the loan during his lifetime and therefore does not make monthly repayments of principal and interest to the lender on the borrowers death or if he or she leaves his property permanently the loan is repaid along with accumulated interest through the sale of property the legal heirs of the borrowers can also repay the loan with accumulated interest and have the mortgage released without resorting to sale industry observers state that making the annuity component taxfree will unlock the biggest asset real estate in the country today today real estate is the biggest asset in the hands of many indians and in that sense it is a great move in terms of popularizing the product srinivas acharya managing director sundaram bnp paribas home finance said so under the scheme if you have a home that has a value of rs 1 crore and assuming a ltv loan to value ratio of 60 your home would be valued at rs 60 lakh under rm you are first entitled a lump sum payout of rs 15 lakh or 50 of the value of the property whichever is lower in this example this would be rs 15 lakh of the balance rs 45 lakh the difference between the first instalment and ltv the borrower has the option of investing this amount on annuity schemes of insurance companies in place of just a rm loan from a bank as earlier this would be as uperior scheme in terms of return as well as time duration also life insurance companies are better when it comes to risk handling r v verma chairman national housing bank the apex body that regulates the housing finance sector in the country said so while the equated monthly payout emi for servicing a home loan is currently rs 1000 per lakh in case of rm this is expected to be higher for every lakh of loan we are looking at the possibility of a higher interest rate 1 to 15 more than interest on home loan which is currently around 10 verma said and while the cap on maximum payout rs 50000 per month in case of a reverse mortgage loan availed by a borrower from a bank would continue there is no limit fixed in case the beneficiary opts for an annuity payout but since the scheme was launched almost four years back there arent many takers for rm till date only about rs 1700 crore have been disbursed as reverse mortgage loans across the country and this offtake has been restricted to north and