Loan guarantees will be offered by Hong Kong Mortgage Corporation to owners of government-subsidised flats to make it easier to sell or rent their homes on the open market.
The state-owned mortgage company will offer loan guarantees of up to HK$3 million to help Home Ownership Scheme (HOS) beneficiaries pay the government premiums of their flats, which is needed to sell or lease flats.
The Premium Loan Guarantee Scheme programme is one of the measures proposed by the Housing Authority to revive the pre-owned HOS flats market.
Out of 320,000 HOS flats in the city-state, 65,000 flats have paid their premiums.
The company’s loan guarantee enables flat owners to get second mortgages, which they will repay through instalments together with their first home loans for up to 30 years.
The company will be charging a guarantee fee of between 1.8 percent and 3.8 percent of the premium loans yearly for a maximum of three years.
The maximum amount of premiums for second home loans is either HK$3 million or the entire premium, whichever is less.
The combined amount of the two mortgages should not exceed 90 percent of the total property value, while repayments must not be more than half of the household income.
"The objective is to provide HOS owners with an alternative option without spurring property prices," said a government spokesman.