Reverse mortgage for HDB flats

Here are the tentative terms, subject to modification.
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1. Eligibility

All flat owners from age 70 to 90, who has no and small outstanding loan on their HDB property. The lease at the end of the loan period should be at least 50 years
Borrower must be our life policyholder for at least 1 year. For non-policyholder, borrower can take up a life/personal accident policy

2. Tenure of loan - age 90 or death, whichever is earlier subject to 20 years term.

3. Monthly drawdown

Below is an illustration of the maximum drawdown per month (assuming upfront fees of $3.5k):

FlatType  PropValue     Monthly Payout 

3-room       160k         $200-$230         
4-room       240k         $320-$360         
5-room       320k         $430-$490         
Exec apt     480k         $660-$750         

Monthly payout should not fluctuate greatly and should be for 20 years or up to age 90 years.

For someone who enters at age 70, the monthly drawdown is 0.2% of the property value at the time of taking the loan. The borrower can opt to receive a lower amount. NTUC Income is allowed to vary the monthly payout in accordance to the value of the property.

4. Lump sum borrowing

At the start of the loan, the owner can take a lump sum of up to 5% of property valuation – once off. This is mainly intended to help borrowers settle other debt he/she may have run up at much higher interest rate.

5. Mechanism of the reverse mortgage

a. Loan repayment

The loan is not repayable until the oldest borrower have died or moved out of their flat. The total loan outstanding including interest must then be repaid.

If one of the borrowers dies, or needs to go into medical or care facility, monthly drawdown amount will not change. The other borrower can carry on living in the HDB property as before.

b. Property value fluctuation

If the HDB property increases in value, it will allow the monthly drawdown to be extended for a longer period, and leave a larger balance to be passed to the beneficiaries. If the flat decreases in value, NTUC Income may cease the payout if the outstanding sum exceeds 70% of the value of the property.

c. Early repayment

We allow the owner to sell the flat at any time and repay the balance of the loan without penalty.

If the borrower downgrade to a smaller HDB flat, the RM loan have to be repaid in full or repaid in part if the smaller HDB flat is under RM financing, depending on the situation.

6. Counseling and financial advice (Mandatory)

This is to ensure that the borrower understands the working of reverse mortgage, and how it serves their needs. The borrower must be made fully aware of the features and risks, including:

personal counseling, as each borrower’s financial situation is unique
access to advice on their legal rights - Eg: home may not be left to heirs.
a reverse mortgage is a long term commitment and not for short term cash needs
advise on the consequences of repossession and on other income alternatives, such as downgrading to a smaller flat, or home-stay arrangements