The Hong Kong government has announced it will implement a reverse mortgage pilot plan next year.
This comes after a two-month survey of more than 1000 aging home owners who had almost paid off their mortgages (or had finished paying it off). Nearly 50 percent of those surveyed had showed interest in the reverse mortgage scheme, which allows elderly home owners to use their fully paid homes as collateral for a new mortgage.
The government said those who would borrow back on their property can receive payments over different amounts of years, depending on their choice. It can range from 10 years to the rest of their life.
They can live in the house for the rest of their lives, but when elderly borrowers die, ownership of the house will be forfeited by the bank offering the reverse mortgage scheme. This means that their children or relatives will not be able to use the property. However, if the property was sold and there is excess money after the reverse mortgage has been paid off, the excess will go to the owner’s beneficiaries. Also, if the property was sold for less than the amount of the loan, the beneficiaries will not be responsible for paying off the remaining amount of the loan.