Govt studying reverse mortgage as means to help elderly

The government is seriously studying the reverse mortgage scheme as an additional option to help the elderly in Singapore monetise their flat.

Under a reverse mortgage, the owner retains the full lease of his flat but takes a loan against it as collateral.

The owner then repays the loan with accumulated interest upon termination, or death, usually with sales proceeds from the flat.

The idea of a reverse mortgage was mooted by some participants at the Our Singapore Conversation on Housing sessions last year.

“Many told us that they want two things: age in place and… to have an asset they can bequeath to the family,” said Minister for National Development Khaw Boon Wan.

With a better understanding of the needs of seniors and experience in other monetisation schemes for the elderly — like the Lease Buyback Scheme that allows the elderly to sell back part of their existing lease to HDB while retaining a 30-year lease — Mr Khaw says it is timely to revisit the option of reverse mortgages.

However, he also noted it is something that NTUC Income had tried in 2006 but did not quite take off.

“We hope to formulate a practical scheme for our elderly. Along the way, we will also see if the Lease Buyback Scheme can be further improved as suggested by some members here, to be extended to larger flat types,” said Mr Khaw.

Looking at the year ahead, Mr Khaw said he plans to have more conversations with Singaporeans on the relationships and values they hold dear as a society and how housing policies can better support them.

Source : Channel NewsAsia – 10 Mar 2014

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