How Did the Reverse Mortgage Scheme Work?

How Did the Reverse Mortgage Scheme Work?

In July 2011, HKMC chief Norman Chan explained: elderly participants could choose 10, 15 or 20-year fixed terms, or a lifetime monthly annuity. Interest compounded on the outstanding loan (including interest) at prime minus 2.5%; the first seven banks used the same prime, and rate moves would not affect payouts.

What did it cost?

Two-part premium: a basic premium in seven instalments (years 4-10) at 0.28% of property value each, plus a monthly premium at 1.25% a year on the outstanding loan. Applicants needed legal counselling (~HK$3,000 one-off); changing terms or lump-sum withdrawal cost HK$1,000. Cancelling within six months with full repayment refunded premiums in full.

Who was it for?

Asset-rich, cash-poor elderly — turning a flat into monthly income. Any residual after death went to heirs.

How did MPF fit alongside it?

MPF was the other pillar — withdrawable in full at 65 or left to compound. Compare MPF funds to check your funds suit retirement.