The Hong Kong Mortgage Corporation Limited
Policy Reverse Mortgage Programme
Policy Reverse Mortgage
Enriches Your Retired Life
The Policy Reverse Mortgage Programme is operated by HKMC Insurance Limited (HKMCI), a wholly-owned subsidiary of The Hong Kong Mortgage Corporation Limited (HKMC), for people who are aged 60 or above to apply for policy reverse mortgage loans.
What is a policy reverse mortgage?
Policy reverse mortgage is a loan arrangement. It enables a borrower to use his life insurance policy as collateral to borrow from a lender.
The borrower can opt to receive monthly payouts either over a fixed period of 10, 15 or 20 years or throughout his entire life until the maturity of his life insurance policy. The borrower may also borrow lump-sum payouts for specific purposes when needed.
In general, the borrower does not need to repay the policy reverse mortgage loan during his lifetime, unless his policy reverse mortgage loan is terminated under specific circumstances.
In most cases, the policy reverse mortgage loan will become due and payable when the borrower passes away. The lender will enforce his life insurance policy within a specified timeframe to repay in full the outstanding loan amount. The amount recoverable from his life insurance policy to be used for repayment of the policy reverse mortgage loan will be the death benefits of his life insurance policy.
If the amount of the death benefits exceeds the outstanding loan amount under the policy reverse mortgage loan, the lender will pass the surplus to the borrower (or his personal representative) after repaying the outstanding loan amount in full. If there is any shortfall, it will be borne by the HKMCI under an insurance arrangement between the lender and the HKMCI.
Life insurance policy
1 Please refer to the Important Notice for further information.
Key product features and benefits
Key product features and benefits
Flexible payment term
The borrower can choose to receive monthly payouts either over a fixed period of 10, 15 or 20 years or throughout his entire life until the maturity of his life insurance policy. The borrower has the flexibility, at any time during his payment term, to apply to switch to another payment term.
The borrower may apply to borrow lump-sum payouts at the time of policy reverse mortgage loan application and/or at any time during the selected payment term for the following purposes２:
For borrower withdrawing a larger lump-sum payout amount, there will be a correspondingly lower monthly payout amount. If the borrower withdraws the maximum amount of lump-sum payout, he will not receive any monthly payouts thereafter.
Two options of mortgage plans
The borrower can choose a floating-rate or fixed-rate mortgage plan to meet his financial needs. In general, a fixed-rate mortgage plan offers higher payout amounts than a floating-rate mortgage plan.
No repayment during the borrower’s lifetime
In general, the borrower does not need to repay the outstanding loan amount during his lifetime, unless the policy reverse mortgage loan is terminated under specific circumstances.
No penalty for early full repayment
The borrower may fully repay the outstanding loan amount and redeem the life insurance policy at any time without penalty. However, he may not repay only a part of the outstanding loan amount.
Six-month cooling-off period
If the borrower terminates his policy reverse mortgage loan for whatever reason, provided that he notifies the lender within the first six months and repays in full the outstanding loan amount on the proposed repayment date, he will be given a full refund and waiver of the relevant mortgage insurance premiums. However, the borrower still needs to bear any accrued interest and financed fees in the outstanding loan amount.
2 Supporting documents are required for each lump-sum payout application. Other purposes not listed above may be considered on a case-by-case basis.
3 Relevant loans must be made at least 12 months before the application date of lump-sum payout. However, this requirement is not applicable to revolving credit facilities or credit card balances.
Monthly payout amount
In general, the higher is the death benefits of the life insurance policy, the higher will be the monthly payout amount. The older the borrower is at the time of loan application and the shorter is the payment term, the higher will also be the amount of the monthly payout.
The mortgage plan the borrower chooses will also affect the amount of monthly payout. In general, the payout amounts offered under a fixed-rate mortgage plan are higher than those under a floating-rate mortgage plan.
In general, the monthly payout amount will remain constant or increase over the payment term, depending on the annual review of the death benefits of the life insurance policy.
Example of monthly payout amounts (HK$)
Age of borrower
Gender of borrower
Death benefits of life insurance policy
Monthly payout amounts4
Floating-rate mortgage plan 5
Fixed-rate mortgage plan 6
4 The above monthly payout amounts are based on a specific life insurance policy of a well-known insurance company and are for illustration purpose only. The actual monthly payout amount for individual life insurance policies may vary.
5 The above monthly payout under the floating-rate mortgage plan is calculated at the interest as at 30 June 2021 (i.e. the Hong Kong Prime Rate minus 2.5% p.a.), and is for reference only. The floating interest rate and the Hong Kong Prime Rate will be determined by the HKMCI and the HKMC from time to time respectively.
6 The above monthly payout under the fixed-rate mortgage plan is calculated at the interest rate of 4% p.a. for the first 25 years and the Hong Kong Prime Rate minus 2.5% p.a. thereafter, and is for reference only. The fixed interest rate and the Hong Kong Prime Rate will be determined by the HKMCI and the HKMC from time to time respectively.
Policy reverse mortgage is a loan arrangement and interest is charged by the lender on the outstanding loan amount (including interest) on a compound basis.
Mortgage insurance premium
The mortgage insurance premium is divided into two parts and the amount payable by the borrower will be posted to the outstanding loan amount:
(i) Upfront Mortgage Insurance Premium is 1% of the specified policy value, payable by 5 annual instalments on the 1st, 13th, 25th, 37th and 49th monthly payout dates respectively. Each annual instalment is calculated at 0.2% of the specified policy value under the policy reverse mortgage loan.
(ii) Monthly Mortgage Insurance Premium is payable on a monthly basis at the annual rate of 1% of the outstanding loan amount.
A handling fee of HK$1,000 will be charged for each successful application for change of payment term or request for a lump-sum payout, after a policy reverse mortgage loan has been granted. Such handling fee will be debited to the outstanding loan amount.
Other fees and expenses
The borrower may need to pay for the fees and expenses charged by the insurance company of his life insurance policy, if any, for any necessary arrangement relating to the assignment of his life insurance policy.
General Application Flow
Please read the Important Notice carefully before proceeding further with application for a policy reverse mortgage loan. The notice provides additional information about policy reverse mortgage, and should always be read together with the Information Pack and the other materials relating to the Policy Reverse Mortgage Programme.
General Application Flow
Step 1: Pre-assessment
Enquire with an institution which is participating in the Policy Reverse Mortgage Programme as a lender or referrer (participating institution) which will explain details of the programme (including the Information Pack, Important Notice, Indicative Loan Schedules and Information Sheet) and conduct a preliminary eligibility assessment. For the list of participating institutions of the Policy Reverse Mortgage Programme, please click here.
Step 2: Application
After completion of the preliminary assessment, the borrower may approach a participating institution to make an application if deem it appropriate.
Step 3: Execution of legal documents
After the formal application is approved, the borrower can execute the relevant legal documents with the lender.
For details, please refer to the Policy Reverse Mortgage Programme’s Information Pack.
Should there be any enquiries, please call the HKMC Retire 37 Hotline at 2536 0833 or
email us at email@example.com. You may also contact a participating institution.
7 HKMC Retire 3 refers to the Reverse Mortgage Programme and the Policy Reverse Mortgage Programme operated by HKMCI and the HKMC Annuity Plan underwritten by HKMC Annuity Limited (HKMCA). The HKMCI and the HKMCA are the wholly-owned subsidiaries of the HKMC.
The programme is subject to relevant terms and conditions.