National Housing Bank (NHB) is planning to restructure reverse mortgage scheme for senior citizens with the help of leading insurance firms that includes the largest player in the industry, Life Insurance Corporation of India (LIC).

Reverse mortgage is a special type of home loan that allows elderly homeowners to convert the equity in their home into cash. Presently a borrower who avails a reverse mortgage loan against his property receives monthly installments for a period of twenty years and following this period, the scheme gets ceased by the lender. No repayments are required until the property is sold or the homeowner dies. After the death of the borrower, his legal heirs can either surrender the property to the bank or repay the loan.

Chairman and Managing Director of NHB, S Sridhar said, "We are in talks with many insurance players and expect to come with this (the restructured scheme) in the next few months. This would enable senior citizens to avail the facility till their death."

The reverse mortgage scheme was launched last year in India and since then loans amounting to only around Rs 550-crore has been extended to about 2,000 customers by 20 home lenders together. This concept has not gained importance in India and even major banks including Punjab National Bank and Union Bank of India did not see a good reaction for the scheme.

However now the scheme is becoming popular and attracting more customers because government has exempted the income received under the reverse mortgage scheme from tax.

Recently NHB has received an aid of Rs 4,000 crore by the government to help banks in enhancing small home loans.