A reverse mortgage pilot program has launched in Taiwan in order to address the rising number of older citizens facing financial insecurity, according to local reports this week. The program will be funded in part through a government subsidy resulting from Taiwan’s lottery revenues.
The program, currently set to be carried out through 2017, will operate as a trial for 100 people who are aged 65 or older and who are single, without any heirs. In order to qualify for the program, they must not qualify for assistance under the country’s Public Assistance Act.
Certain caps will be placed on the homes’ values, depending on where they are located. Monthly payments to the reverse mortgage borrowers will be calculated depending on the age, gender and home value.
Taiwan Today writes:
Chuang Chin-chu, a section chief with the MOI Department of Social Affairs, said the property value standard announced by the central and local governments varies each year. “In 2013, it is capped at NT$7.76 million (US$263,051) for Taipei City, NT$5.25 million for New Taipei City, NT$3.75 million for Kinmen and Lienchiang counties and NT$4.8 million for the rest of the country.”
Lee said the Land Bank of Taiwan will work with the government on this policy. “The amount paid out every month to the homeowner will be calculated according to the value of the asset, as well as the age and gender of the applicant.”
For example, for those 70 years old owning real estate worth NT$10 million, a man will receive NT$34,800 monthly, while a woman will get NT$30,300, Lee said. “The variation is based on the longer average life expectancy of women.”
Properties worth more will generate higher allowances, he explained. “A 70-year-old female owning real estate valued at NT$5 million will be given NT$15,000 per month, compared to NT$21,100 and NT$27,200, respectively, for women of the same age with houses worth NT$7 million and NT$9 million.
“Payments will increase by 1 percent each year to keep up with inflation and will continue until the homeowner passes away,” he said.
“Compared to foreign reverse mortgage programs, mostly operated as a financial product, the plan in Taiwan is implemented through a social welfare model,” Lee continued. “The Ministry of Finance will provide a subsidy of NT$64 million with surplus lottery money as the source.”
Read the full article at Taiwan Today.
Written by Elizabeth Ecker