HKMA enhances Reverse Mortgage Programme
The Hong Kong Mortgage Corporation Limited (HKMC) today announced that three enhancements to the Reverse Mortgage Programme will come into effect on 16 November 2012, bringing greater flexibility and benefits to both existing and prospective reverse mortgage borrowers.
These enhancements include: increasing the maximum specified property value for payout calculation from HK$8 million to HK$15 million. For properties worth over HK$8 million, a discount will be applied in computing the specified property value. Eligible existing borrowers with original property value over HK$10 million1 may opt to receive a higher monthly payout; lowering the minimum age of borrowers from 60 to 55 in response to requests from potential applicants below the age of 60, e.g. early retirees and couples with one spouse younger than 60 (see Annex B for the relevant monthly payout table); and increasing the maximum lump-sum payout amount.
For borrowers drawing a larger lump sum, there will be correspondingly a lowering of the monthly payout amount. Borrowers who opt to withdraw the maximum amount of lump-sum payout and forgo the monthly payouts will still be entitled to live in their property for the rest of their life.
Mr Peter Pang, Executive Director of the HKMC and Deputy Chief Executive of the Hong Kong Monetary Authority, said these enhancements were developed after consultation with stakeholders on how the HKMC's Reverse Mortgage Programme can better meet the need for quality life among the elderly in Hong Kong.
With these improvements to the reverse mortgage product, more people in Hong Kong will become eligible to take out a reverse mortgage, thereby availing themselves of more flexibility in their financial planning after the age of 55. The banks will be informing the existing reverse mortgage borrowers of the enhancements and the arrangement if they should wish to apply for changes to their existing terms of the reverse mortgage. For more details, please visit the HKMC website.