The government has proposed a trial run for a public welfare reverse mortgage scheme this year, under which housing loans will be provided for single people aged above 65 without an heir.
The policy aims at redressing a surge in the number of single elderly people who own real estate, but lack enough income to cover daily expenses.
The reverse mortgage works by the loan agency giving the recipient money, either on a monthly basis or as a lump sum, secured against the eventual sale value of the property.
According to a government draft report on the reverse mortgage system, Taiwan embarked on the path to a rapidly ageing society in 1993.
Citizens aged 65 and above accounted for 10.4 percent of the population in 2008, a number that is expected to climb to 14 percent in 2017, which will qualify the nation as an “aged” society by international standards.
Such trends are creating pressing social issues, such as an increasing number of single elderly citizens who own property, but are unable to cover their living expenses.
In light of this, government officials have examined other countries and regions, such as Singapore and Hong Kong, to learn how these societies, which are also facing an ageing problem, deal with the matter.
A handful of seminars have been held to discuss the feasibility of implementing the reverse mortgage policy and the government has reached a consensus to launch trial programs in Taipei, New Taipei City (新北市) and Greater Kaohsiung this year.
The reverse mortgage system would be implemented as a “public welfare scheme” in the initial stage, with NT$33 million (US$1.1 million) in profits from the Public Welfare Lottery used to fund the scheme.
Under the mortgage scheme, single homeowners aged 65 or above who have no heir and who fail to meet the subsidy threshold for low-income households because the value of the property or properties they own exceeds the regulated amount would be able to borrow money from the Bank of Taiwan for their living expenses.
The home equity would be released in monthly installments and would be available for a maximum of 30 years, as stipulated in the Civil Code, while homeowners are entitled to alter or extend the maximum period of the loans.
As housing value differs based on location, homeowners will be asked to turn to the Republic of China Real Estate Appraisers Association for estimations.
Chang Chin-oh (張金鶚), a professor of land economics at National Chengchi University, said the reverse mortgage scheme initially proposed that homeowners aged 65 could receive a maximum loan equivalent to 65 percent of the net property value, while those aged 75 could be granted a 75 percent loan.
The Financial Supervisory Commission has already approved similar programs, such as the sale-leaseback deal and commercial reverse mortgage loans, allowing elderly homeowners to turn their property into disposable income. However, most financial institutions were reluctant to take on the sale-leaseback deal because of concerns about the limited market and high risk involved.
Commenting on the reverse mortgage system, Sinyi Realty Inc head researcher Stanly Su (蘇啟榮) said the majority of senior citizens who own property in downtown areas normally choose to sell their property for a lump sum, which they then use as their old age pension, and move in with their offspring. He said it was rare that elderly people would mortgage their real-estate for a monthly sum.
Translated by Stacy Hsu, Staff Writer
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