** Properties over 50 years old are considered on a case-by-case basis and subject to building inspection.
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The maximum number of borrowers is three persons, which can be spouses, siblings or unrelated parties.
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If one person owns a property jointly with another person, both owners must be parties to the reverse mortgage loan.
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All borrowers must be able to satisfy the relevant eligibility criteria.
Lump-sum loan
When the borrower applies for a reverse mortgage, the bank will specify in the facility letter the maximum and minimum lump-sum that may be borrowed at the time of application. These maximum and minimum amounts will be reduced during the payment term. Each time a lump-sum is borrowed, the monthly payment is reduced.
What costs is the borrower responsible for?
The borrower is responsible for:
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interest expense;
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mortgage insurance premium;
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counselling fee;
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administrative fee;
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legal fee;
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registration fee; and
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other fees and expenses.
How much does the borrower receive every month?
The borrower receives a fixed monthly payment, whose amount depends on:
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the term of the annuity payment;
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the age of the borrower; and
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the value of the property.
For every HK$ 1 million of the property's value, the monthly payment for borrowers at the entry age of 55, 60 or 70 are as follows: Term of annuity payment Amount of monthly annuity payment (HK$)
|
Term of annuity payment |
Amount of monthly annuity payment (HK$) |
|
One borrower |
|
55 years old |
60 years old |
70 years old |
|
10 years |
$3,200 |
$3,700 |
$5,100 |
|
15 years |
$2,400 |
$2,800 |
$3,800 |
|
20 years |
$2,050 |
$2,400 |
$3,300 |
|
Life annuity |
$1,650 |
$2,000 |
$3,100 |
|
Term of annuity payment |
Amount of monthly annuity payment (HK$) |
|
Two borrowers |
|
55 years old |
60 years old |
70 years old |
|
10 years |
$2,800 |
$3,300 |
$4,600 |
|
15 years |
$2,150 |
$2,500 |
$3,500 |
|
20 years |
$1,800 |
$2,100 |
$3,000 |
|
Life annuity |
$1,450 |
$1,800 |
$2,800 |
|
Term of annuity payment |
Amount of monthly annuity payment (HK$) |
|
Three borrowers |
|
55 years old |
60 years old |
70 years old |
|
10 years |
$2,500 |
$3,000 |
$4,200 |
|
15 years |
$1,900 |
$2,250 |
$3,200 |
|
20 years |
$1,600 |
$1,900 |
$2,700 |
|
Life annuity |
$1,250 |
$1,550 |
$2,400 |
For other ages, please visit
HKMC website to determine the monthly payout.
On 16 November 2012, the maximum property value for payout calculation was increased to HK$15 million. For properties worth over $8 million, a discount is applied in computing the specified property value. For any property valued at HK$25 million or above, the maximum specified property value for payout calculation is capped at HK$15 million.
How to calculatethe monthly annuity payment if one borrower is 60 years old and the co-borrower is 70 years old
When there are two borrowers, the annuity payment will depend on the age of the younger borrower.
|
|
Example 1 |
Example 2 |
Example 3 |
|
Borrower(s) and entry age |
One borrower aged 70 |
Two borrowers, one 70 and the other 60 |
Two borrowers, both 70 |
|
Payment term |
Life |
Life |
Life |
|
Property value (HK$) |
$2.5 million |
$2.5 million |
$9 million |
|
Monthly payout (HK$) |
$3,100 x 2.5 = $7,750 |
$1,800 x 2.5 = $4,500 |
$2,800 x 8 = $22400 |
Example 2
When there are two borrowers, the amount of the monthly annuity payment will depend on the age of the younger borrower. The entry age of the younger partner is used for calculation.
Example 3
The property value used for calculation is capped at HK$8 million. Even though the property value in this example is HK$9 million, the monthly payment will be determined as if the property were worth HK$8 million
Borrower may use the Reverse Mortgage Calculator designed by the
HKMC to estimate the amount of mortgage one can get.
Assignment of life insurance policy
The borrower may choose to assign his life insurance policy to the bank as extra collateral in addition to his residential property under a reverse mortgage. The additional collateral will increase the amounts of monthly and lump-sum payouts of the reverse mortgage loan. The amount recoverable under a life policy assignment to be used by the bank for repayment of reverse mortgage loan is limited to the cash surrender value of the life insurance policy.
There is no limit on the number of life insurance policies for assignment but the aggregate amount of cash surrender value is capped at the specified property value of the property under the reverse mortgage loan.The assignment can be made at the time of application for a reverse mortgage loan or at any time before the reverse mortgage loan is terminated.
The option of life insurance policy assignment is available only when the number of borrower is not more than two. It is necessary that the beneficiary of the borrower's life insurance policy be the borrower himself or his own estate in the case of a single-borrower application, or the co-borrower in the case of a joint-borrower application. The borrower is required to arrange with his insurance company to change the beneficiary as necessary.
In general, when the reverse mortgage loan terminates and the sale proceeds from the property are insufficient to repay the total outstanding loan amount in full, the bank will apply the payment derived from the life insurance policy, up to the then available cash surrender value, to recover any shortfall. However, if any shortfall still remains after such repayment, it will be borne by the HKMC under an insurance arrangement between the bank and the HKMC. In any case, any surplus after full repayment of the reverse mortgage loan shall be returned to the borrower (or his inheritors).
The borrower may apply for the release of his life insurance policy assigned to the bank under the reverse mortgage loan at any time subject to the payment of a handling fee. There is no penalty for such release.
Eligibility Criteria for Assignment of Life Insurance Policy
In general, the life insurance policy must:
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be taken out by the borrower as both the policyholder and the insured;
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be issued by an authorized insurer in Hong Kong;
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be denominated in Hong Kong Dollars or United States Dollars;
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have accrued a cash surrender value which is non-decreasing for the remaining term;
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have the premium fully paid-up by the policyholder (Note);
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not be associated with any investment features; and
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be assignable and not contain any restriction on change of beneficiary
(Note) If the borrower's life insurance policy has not been fully paid up and/or has a policy loan granted by the insurance company, the borrower may apply to borrow a lump-sum payout to fully pay up the life insurance policy and/or repay the policy loan at the time of application for assignment.
When does the reverse mortgage terminate?
The reverse mortgage terminates when:
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the borrower repays the loan in full;
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the borrower voluntarily delivers vacant possession of the property to the bank to allow the bank to sell the property for the borrower;
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the property is no longer the borrower’s principal residence in Hong Kong;
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the borrower has passed away, or in the case of a joint reverse mortgage, both borrowers have passed away;
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the borrower, or in the case of a joint mortgage, one or both borrowers, is adjudged bankrupt or becomes the subject of an individual voluntary arrangement; or
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other circumstances occur.
