Senior citizens in Hong Kong are eager to take advantage of the new reverse mortgage programme that provides them with a monthly income while they reside in their homes.
The Hong Kong Mortgage Corp (HKMC) has granted more than 30 applications since the programme’s debut on 11 July and has received over 800 enquiries, said Corporation Chief Executive James Lau.
The successful applicants received an average of HK$11,000 per month on flats with a mortgage worth between HK$2 million and HK$8 million.
The mortgage programme includes flats under the Home Ownership Scheme and almost 40 percent of the applications already granted are located on Hong Kong Island.
“The monthly payout will not be affected even though home prices drop”, said Lau, noting that senior citizens had made “numerous calls” expressing their apprehension on the matter.
He added that “borrowers can apply for refinancing for higher monthly payments if home prices rise.”
Lau also said that if the property owner is deceased, banks will auction off the property and reimburse the remaining proceeds to their families. “If banks suffer losses in such auctions, HKMC will cover the difference,” he said.
Banks committed to the programme include the Bank of East Asia, Bank of China (Hong Kong), Wing Lung Bank and Nanyang Bank. Meanwhile, Bank of Communications (Hong Kong), Standard Chartered Bank and Wing Hang Bank will start offering the reverse mortgage in September.
The plan enables people aged 60 and above to receive at least HK$5,100 per month for every HK$1 million of the value of a self-occupied property.
After deducting fees and premiums, a couple under a 10-year plan can receive between HK$3,300 and HK$4,600 for every HK$1 million of the value of their property, depending on their ages.
To contact the journalist, you may send your message to editor@propertyguru.com.sg