Know-how of Reverse Mortgage Programme
Under the Reverse Mortgage Programme, the property owner can convert their residential properties into cash or a regular steam of monthly payouts. At the same time, they can live in their properties for the rest of their life.
What is a Reverse Mortgage Programme?
The Reverse Mortgage Programme enables people aged 55 or above to use their residential properties in Hong Kong as a security to obtain reverse mortgage loans. It is operated by HKMC Insurance Limited (HKMCI), a wholly-owned subsidiary of The Hong Kong Mortgage Corporation Limited (HKMC).
The borrower can receive monthly payouts over a fixed payment term or throughout his entire life or receive a lump-sum payout. They do not need to repay their mortgage loan during their lifetime.
Features of Reverse Mortgage Programme
Age of borrowers: They must be aged 55 or above and hold a valid Hong Kong identity card. If their property is a subsidized sale flats with unpaid land premium, they must be aged 60 or above.
Properties: The borrower must be a sole and beneficial owner or as joint tenants. The age of the property does not exceed 50 years of age. And the property must not be rented out unless the borrowers declare they have retired or moved out to obtain medical care.
Period: The borrowers can get a stable monthly payout for a fixed period of 10, 15 or 20 years or throughout their lifetime or a lump-sum payout.
Property value: If the property value is $8 million or less, the maximum amount of specified property value for payout will be 100% of the appraised property value. If the property value is over $8 million, the maximum amount of specified property value for payout will be the sum of $8 million and 50% of the portion exceeding $8 million (capped at $25 million).
Mortgage plan: The borrower can choose a floating-rate or a fixed-rate mortgage plan.
Calculation of monthly payout amount
The monthly payout amount is influenced by the entry age, payment term and property value. If a husband (aged 70) and a wife (aged 60) apply for the Reverse Mortgage Programme, and the payment term is 10 years and the property value is $6,000,000, their monthly payment amount is $19,800 for floating-rate mortgage plan and $23,340 for fixed-rate mortgage plan.
If both of the husband and his wife are aged 70, their payment term is 20 years and the property value is $45,000,000, the monthly payment amount is $75,000 for the floating-rate mortgage plan and $88,500 for the fixed-rate mortgage plan.
If you want to know the monthly payment amount you can get, you can fill in the number of applicants, their ages, appraised property value and interest rate option in the HKMC’s reverse mortgage calculator and you can get an estimated payout.
Procedure of application
Step 1: You can fill in the application form of mReferral and our colleague will introduce the most suitable bank for you.
Step 2: Afterwards, an eligible counsellor will explain the details of the programme and conduct an assessment with you.
Step 3: After the meeting with the counsellor about the features, rights and obligations of the programme, you will receive a counselling certificate.
Step 4: Finally, a formal application will be submitted. And the borrower needs to fill up a health questionnaire conducted by the HKMCI. The mortgage will be executed after the application is approved.
Costs of Reverse Mortgage Programme
The costs of joining the Reverse Mortgage Programme involve interest expense, mortgage insurance premium, counselling fee and legal fee.
If you want to learn more information about Reverse Mortgage Programme or need help from our mReferral mortgage team, please feel free to reach us at 3196-6688.