REVERSE MORTGAGE TO BE REVISITED
The Ministry of National Development is revisiting the subject of reverse mortgages to offer home owners more choices, said Minster of National Development Khaw Boon Wan yesterday.
In 2006, NTUC Income offered reverse mortgage for HDB flats, but only 24 households signed up. NTUC Income has since stopped offering the product.
Minister Khaw said the reverse mortgage scheme has also been unpopular in other countries. A reverse mortgage is a loan taken up by a property owner using his property as collateral.
But unlike a traditional mortgage, the borrower need not make cash repayment during the loan tenure. But it has its risks.
Mr Khaw said: "First, as it does not require periodic cash repayments, the loan balance grows with interest.
"Second, the owner has to bear property risks. If the market value of the property becomes less than the outstanding loan, the owner may have to sell the property to repay the loan."