REVERSE MORTGAGE SCHEME FOR HDB FLAT OWNERS

REVERSE MORTGAGE SCHEME FOR HDB FLAT OWNERS

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(Review of eligibility criteria): **

45.

Dr Fatimah Lateef asked the Minister for National Development (a) why is the take-up rate for the reverse mortgage scheme offered to HDB flat owners extremely low; and (b) whether it will be necessary to review the criteria for eligibility of the scheme.

Mr Mah Bow Tan: Reverse mortgage is one of the options available to elderly HDB flat owners who wish to monetise their HDB flats. It is an option which is offered by financial institutions, with the approval of HDB. To date, NTUC Income is the only financial institution offering a reverse mortgage scheme for HDB flat owners.

Dr Fatimah is right in that the take-up rate for reverse mortgage scheme has been low. One of the reasons could be unfamiliarity with the scheme, which was introduced only recently in 2006. Another reason could be a desire among elderly lessees to bequeath their flat to their children. This was revealed by a survey conducted by HDB. Therefore, I believe that time is needed before reverse mortgage is better understood and accepted among the elderly.

Dr Fatimah has asked whether the eligibility criteria of the scheme should be changed. The main criteria stipulated by HDB are one, the minimum age of 62 for the youngest lessee and two, the loan tenure should cover the youngest lessee up to age 90. These are put in place to minimise the risk of elderly lessees losing their homes as a result of outliving the loan term.

HDB will explore with relevant organizations and agencies to further improve awareness of reverse mortgage and other monetisation options among elderly Singaporeans. Such options include selling the flat to stay with their family, downgrading to a smaller flat including a Studio Apartment, or subletting either the entire flat or individual room(s). Ultimately, our objective is to put in place a wide range of housing options for the elderly to support a comfortable and meaningful retirement. Each elderly household can then decide how best to unlock the value in their flat, based on their respective needs and preferences.