A reverse mortgage company is conducting a feasibility study in Thailand for a home equity product geared toward homeowners who are over 60 years old and are unable to qualify for a traditional mortgage.
The Secondary Mortgage Corporation (SMC) plans to be the country’s first to offer this type of loan, according to a report by the Bangkok Post. The SMC is not a bank, but will make the loans by contracting with particular banks.
Among the study topics are the interest rate, spousal issues and the amount of home equity that can be borrowed.
The Bangkok Post reports:
“With its new product, the SMC plans to be the country’s first to offer loans to clients aged over 60, with no need for monthly payments.For retirees, a mortgage loan which normally requires at least 20 years of work to ensure debt payment ability is seemingly impossible, but the Secondary Mortgage Corporation (SMC) is planning to offer a new product focusing on serving the needs of the elderly.
Deputy Finance Minister Wirun Techapaiboon revealed that the SMC is now conducting a feasibility study on the new financial instrument, called a reverse mortgage, focusing on retirees.
“We know that people are concerned that the country will become a greying society in the near future, but we can’t get away from it. The best we can do is to prepare ourselves to cope with the problems that will crop up with that change,” said Mr Wirun.
Since the number of elderly people is set to increase, it is essential for the state to prepare facilities and ensure proper welfare for them, especially those with no family to take care of them.
“The chief concern is if they have no income, no job, no savings and no family, how can they survive in those conditions? Even someone who owns a house, but is no longer earning, how they can live without money to put food on the table? This is where the idea came from, this new product has to answer these questions,” said Mr Wirun.
He said the product will allow retired people to obtain loans by using their houses as collateral, with no need to repay debts, but after the debtor passes away, the collateral will be sold on the market by the SMC to recoup the money.
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Written by Elizabeth Ecker