PrintPolicy Reverse Mortgage Programme
In addition to the Reverse Mortgage Programme, the HKMCI operates the Policy Reverse Mortgage Programme for people who are aged 55 or above to apply for policy reverse mortgage loans.
The borrower chooses to use his life insurance policy as collateral borrow from a lender. He will receive monthly payments over a fixed period or throughout his entire life (until the maturity of his life insurance policy). He may also apply for lump-sum payouts.
There is no limit on the number of policy reverse mortgage loans to be taken out by a borrower, but each loan can only have one life insurance policy as collateral.
The aggregate amount of death benefits of all the borrower’s life insurance policies assigned or to be assigned as collateral under the programme is capped at HK$15 million. For any application with the aggregate amount of death benefits exceeding such capped amount, such application will be considered on a case-by-case basis.
Typically, when the borrower passes away, the policy reverse mortgage loan becomes due and must be repaid. The lender will use the borrower’s life insurance policy to pay off the outstanding loan within a specific timeframe. The amount recoverable from the life insurance policy to be used for repayment of the policy reverse mortgage loan will be the death benefits of the life insurance policy. If the amount of the death benefits exceeds the outstanding loan amount, the surplus will be returned to the borrower (or his representative). However, if there is a shortfall, the HKMCI will cover it through an insurance arrangement with the lender.
Eligibility for Policy Reverse Mortgage Loan
The borrower must:
- be the holder of valid Hong Kong Identity Card;
- be aged 55 or above; and
- not be an undischarged bankrupt or otherwise subject to a bankruptcy petition or individual voluntary arrangement (except if the indebtedness under the relevant individual voluntary arrangement is to be repaid in full at closing by way of lump-sum payout.
In general, the life insurance policy must:
- be taken out by the borrower as both the policyholder and the insured;
- be issued by an authorized insurer in Hong Kong;
- be denominated in Hong Kong Dollars or United States Dollars;
- not be associated with any investment features;
- have the premium fully paid up; and
- be assignable and not contain any restriction on change of beneficiary.
Furthermore, the beneficiary under the borrower’s life insurance policy must be the borrower himself (or his estate).
Monthly Payout Amount
The monthly payout amount of the policy reverse mortgage loan is solely determined by the HKMCI on a case-by-case basis, with reference to a number of factors including age, gender, payment term and the death benefits of the life insurance policy at the time of loan application. The borrower can choose a fixed-rate mortgage plan or a floating-rate mortgage plan.
Click here for the Policy Reverse Mortgage Calculator designed by the HKMCI to estimate the amount of mortgage you can get.