Hong Kong is easing its reverse mortgage policy to give participants more flexibility and higher payouts.
They are no longer required to pledge their main residence as security under new measures announced by the Hong Kong Mortgage Corp. (HKMC).
Also, they will be allowed to use multiple properties and insurance policies as collateral.
Applicants can have three co-borrowers from the previous two, paving the way for more beneficiaries.
Monthly annuity payouts will be raised to HK$3,520 (US$453), an increase of HK$1,520.
A sole applicant who retires at 60 will receive the same amount for every HK$1 million worth of insurance pledged as collateral.
The reverse mortgage program was launched in 2011 to enable people over 55 to borrow money from a participating bank using residential property as security.
The borrower continues to own the property and live in it until death, receiving monthly payouts from the proceeds of the loan.
However, the program has had a slow uptake, with just over 800 applications, a tiny fraction of the elderly population.
The seven participating banks reported a 50 percent increase in applications during the first two months.
HKMC chief executive Raymond Li blamed the poor response to lack of understanding about the details of the program.
For instance, inheritors are concerned about what will happen to the property after the principal borrower dies, he said.
In fact, they have priority in redeeming the mortgage, he said.
Translation by Vey Wong
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