Premium Loan Insurance Scheme
Settle Premium Payment Easily
Fully Own Your Property
The Premium Loan Insurance Scheme (PLIS) is operated by HKMC Insurance Limited (HKMCI) for owners of subsidised sale flats who are aged 50 or above and wish to settle land premium payment to the Hong Kong Housing Authority (HA), the Hong Kong Housing Society (HS) or the Government.
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What is a PLIS loan?
PLIS loan is a loan arrangement. Under the PLIS, borrowers will be granted loans against their subsidised sale flats as security primarily for settling land premium payment to the HA, the HS or the Government. Although borrowers mortgage their properties in favour of lenders, they remain as owners of their properties. After settling the land premium payment, borrowers will have greater flexibility in letting or selling their properties in the open market. In general, a borrower does not need to repay his PLIS loan and can stay in the property during his lifetime, unless the PLIS loan is terminated under certain circumstances.
When a PLIS loan is terminated, a borrower (or his personal representatives) will have the preferential right to redeem the property by repaying to the lender in full the outstanding loan amount owed by the borrower under the PLIS loan.
If a borrower (or his personal representatives) does not exercise such a right, the lender will be entitled to sell his property to settle the outstanding loan amount. If the sale proceeds from the property exceed the outstanding loan amount owed by the borrower, the lender will pass the surplus to the borrower (or his personal representatives). If there is any shortfall, the borrower (or his inheritors) needs not worry as the shortfall will be borne by HKMCI under an insurance arrangement between the lender and HKMCI.
In general, the applicant and the property must:
Note 1: Where the property is subject to a mortgage, such mortgage will have to be discharged on the date when the PLIS loan is drawn down.
Note 2: All joint tenants must be co-borrowers under the PLIS loan, and must satisfy the relevant eligibility criteria.
Note 3: Property exceeding 50 years of age will be considered on a case-by-case basis and subject to building inspection.
Key Product Features and Benefits
|Right to reside, sell or rent||After taking out a PLIS loan (which is in the form of a lump-sum payout at drawdown), the borrower is still entitled to stay in his property for the rest of his life. After settling the land premium payment, the borrower will have greater flexibility in letting Note 4 or selling his property.|
|No repayment during lifetime||In general, the borrower will not need to repay his PLIS loan during his lifetime unless the PLIS loan is terminated under certain specified circumstances.|
|Purpose of lump-sum payout||The primary purpose of the PLIS lump-sum payout is to settle land premium payment. In addition, the lump-sum payout can be used for specific purposes such as repayment of an existing mortgage on the property, payment for home improvement, repair and maintenance of the property and the fees payable to the relevant solicitors and medical practitioners in connection with the borrower’s preparation of an enduring power of attorney or application for a court order under Part II of the Mental Health Ordinance Note 5.|
|Further lump-sum payouts||After taking out a PLIS loan, a borrower may request further lump-sum payout, subject to the maximum lump-sum payout amount, for specific purposes Note 6.|
|No penalty for early repayment||A borrower may partially or fully repay the outstanding loan amount, and there is no penalty for such repayment Note 7.|
|Preferential right to redeem||Upon the termination of the PLIS loan, the borrower (or his personal representatives) will have the preferential right to redeem the property by repaying the lender in full the outstanding loan amount of the PLIS loan within a specified period.|
|Two types of mortgage plan||The PLIS offers the floating-rate mortgage plan and the fixed-rate mortgage plan to allow flexibility for borrowers with different needs.|
Note 4: Borrowers may choose to finance in the PLIS loan the commission paid to the licensed estate agents for letting their properties, which are mortgaged under PLIS loans.
Note 5: Supporting documents are required for each such lump-sum payout application. Other purposes not listed above may be considered on a case-by-case basis.
Note 6: Under the fixed-rate mortgage plan, any request for further lump-sum payout after the first drawdown will be considered on a case-by-case basis.
Note 7: Each partial repayment will be subject to a handling fee of HK$1,000. The minimum amount for each partial repayment and the minimum outstanding loan balance required to be maintained are both set at HK$100,000. Such fee will be financed in the PLIS loan.
In general, the older the borrower and the higher the open market value of the property, the higher will be the maximum lump-sum payout amount. If there is more than one borrower, the entry age of the youngest borrower will be used for calculation of the maximum lump-sum payout amount. Table 1 below shows the maximum amount of specified property value for lump-sum payout calculation. Table 2 below shows the scale of maximum lump-sum payout amount under the floating-rate mortgage plan (per HK$1 million of specified property value) at the entry ages of 50, 60, 65, 70 and 80 respectively. For the maximum lump-sum payout amount under a fixed-rate mortgage plan, borrowers can approach banks for details. In general, the maximum lump-sum payout amount under a fixed-rate mortgage plan is higher than that under a floating-rate mortgage plan.
The primary purpose of the PLIS lump-sum payout is to settle land premium payment. If the borrower borrows only part of the maximum lump-sum payout amount for the land premium payment, he may apply for further lump-sum payout Note 8 up to the maximum lump-sum payout amount for other specific purposes such as repayment of an existing mortgage, payment for home improvement, repair and maintenance of his property and the fees payable to the relevant solicitors and medical practitioners in connection with the enduring power of attorney or application for a court order under Part II of the Mental Health Ordinance.
If the maximum lump-sum payout amount is fully drawn by the borrower at the first drawdown, he will not be allowed to apply for further lump-sum payout thereafter unless he has made partial repayment to the PLIS loan after the first drawdown and the redrawn amount will be capped at his repaid amount Note 8.
Note 8: Under the fixed-rate mortgage plan, any request for further lump-sum payout after the first drawdown will be considered on a case-by-case basis.
1. Specified property value
|Appraised property value||Maximum amount of specified property value for lump-sum payout calculation|
|HK$8 million or less||100% of appraised property value|
|Over HK$8 million to HK$12 million||Higher of 80% of appraised property value and HK$8 million|
|Over HK$12 million to HK$16 million||Higher of 70% of appraised property value and HK$9.6 million|
|Over HK$16 million||Higher of 60% of appraised property value and HK$11.2 million|
(capped at HK$15 million) Note 9
Note 9: For any property valued at HK$25 million or above, the maximum amount of the specified property value for lump-sum payout calculation will be capped at HK$15 million.
2. Maximum lump-sum payout amount
(i) Floating-rate mortgage plan
|Entry age||One borrower||Two borrowers||Three borrowers|
(ii) Fixed-rate mortgage plan
Borrowers should enquire with banks for the maximum lump-sum payout amount under a fixed-rate mortgage plan. In general, the maximum lump-sum payout amount under a fixed-rate mortgage plan is higher than that under a floating-rate mortgage plan.
|Interest expense Note 10||PLIS loan is a loan arrangement and interest is charged by the lenders on the outstanding loan amount (including interest) on a compound basis. For details, please refer to the Indicative Loan Schedules.|
|Mortgage insurance premium Note 10|
Under the insurance arrangement between lenders and HKMCI, lenders pay mortgage insurance premium to HKMCI for mortgage insurance cover and seek reimbursement from borrowers. The mortgage insurance premium is divided into two parts:
i. the upfront mortgage insurance premium is set at 2% of the specified property value and charged on the first drawdown of a PLIS loan; and
ii. the monthly mortgage insurance premium is payable on a monthly basis at the annual rate of 1.5% of the outstanding loan amount.
For details, please refer to the Indicative Loan Schedules.
|Legal fees Note 11||Borrowers will be responsible for the fees of their solicitors for the execution of the mortgage documents and other relevant legal documents, and of the lender’s solicitors for handling the mortgage transaction.|
|Administrative fee for application of land premium assessment Note 11||Borrowers will be responsible for the administrative fee for application of land premium assessment.|
|Handling fees Note 12||A handling fee of HK$1,000 will be charged to the borrower for each partial repayment and for each successful application for subsequent lump-sum payout after the first drawdown of the PLIS loan.|
|Other fees and|
expenses Note 11
|Where a building inspection report is required (e.g. the age of the property exceeds 50 years), borrowers will need to bear such a cost.|
Note 10: The interest and mortgage insurance premium payable will be debited to the outstanding loan amount.
Note 11: Borrowers may choose to finance such fees and expenses in their PLIS loans.
Note 12: Such handling fee will be debited to the outstanding loan amount.
General Application Flow
Please read the Important Notice carefully before proceeding further with application for a PLIS loan. The notice provides general information about PLIS loan, and should always be read together with the Information Pack and the other materials relating to the PLIS.
|Applicants do not need to apply for a PLIS loan through any intermediary (except banks). Please enquire at a bank direct which will provide more details (including the Information Pack, Important Notice, Indicative Loan Schedules and Information Sheet) for reference.|
|Approach a bank to make an application after obtaining the Notice of Premium Assessment issued by the relevant authority.|
Execution of legal documents
|If an application is approved, applicants will be required to engage a solicitor to advise him in relation to the PLIS transaction and to execute mortgage documents and other related legal documents.|
Separate and Independent Legal Representation
To ensure proper protection of borrower’s interests, borrower must engage his own solicitor to represent him independently in the PLIS loan transaction. Such solicitor must be different from the one acting for the lender in the same PLIS loan transaction. A solicitor, or two or more solicitors practising in the same partnership or firm, must not act for the lender and the borrower in the same PLIS loan transaction Note 13 .
Note 13: Please refer to the Outline of Work Flow for Solicitors under the General Information section for the work flow in general for a PLIS loan transaction for illustration purposes.
For enquiry, please contact a bank or HKMCI for more information.
PLIS Hotline: 2536 0136
Enquiry Email: email@example.com