A Hong Kong reverse mortgage corporation is moving forward with plans to launch a reverse mortgage product for seniors this year, The Standard reported.
The government-sponsored corporation, The Hong Kong Mortgage Corp., announced it was in talks with banks to join the new plan in December 2010, but has now released more details. It will begin offering reverse mortgages to people aged 60 and older later in 2011, and will allow them to draw up to HK$5,100 ($654) per month for each HK$1 million ($128,317) of property value. The maximum property value eligible for a reverse mortgage loan will be HK$8 million ($1,026,536), meaning the monthly cap on annuity will be HK$40,800 ($5,235) even if a home’s value surpasses HK$8 million.
Another stipulation of the Hong Kong reverse mortgage states that a single borrower will receive slightly more in monthly annuity than two joint borrowers for every HK$1 million of the value of the property.
“The Reverse Mortgage Pilot Scheme can provide one more alternative for the elderly to opt to receive a steady cashflow to improve their quality of life while staying in their own homes during their life time,” corporation executive director Peter Pang Sing-tong told The Standard. “We will proactively discuss with banks to finalize the details and launch the scheme in mid-2011.”
As in U.S. reverse mortgages, the borrower can make a lump-sum withdrawal. In Hong Kong, the withdrawal can range from 15% to 50% of the property value. Additionally, there is a six-month opt-out period and if a borrower terminates and repays the mortgage within the rescission period, the insurance premium payable during that period will be waived, the article stated.
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Written by Elizabeth Ecker