Hong Leong Finance rolls out loan scheme to help retirees monetise private homes

Thursday, March 23, 2017

by Lee Meixian

HONG Leong Finance on Wednesday said it is rolling out a new loan programme that provides flexibility to help retirees monetise their private home properties.

Called "Mortgage Equity@50", the new loan programme is launched in the wake of the government's recent relaxation of the Total Debt Servicing Ratio (TDSR) framework for mortgage equity withdrawal loans with loan-to-value (LTV) ratios of 50 per cent and below.

Essentially, it will give retirees cash liquidity in the form of a term loan of up to 50 per cent of the mortgage equity with TDSR exemption, in what is a first-of-its-kind programme in Singapore, Hong Leong Finance said.

The programme also comes with a feature that allows customers to make multiple early capital payments whenever they have spare cash. This can help them to save on interest costs. They can also enjoy a penalty waiver - of a 1.5 per cent penalty that is usually chargeable on early capital payments - during the lock-in loan period.

Under this feature, customers who have made one or more early capital payments during the two years will also qualify for a simpler and more straightforward application process for new loans on the same mortgage, if required.

The loan programme is available in fixed and variable rate packages (see table).

Ang Tang Chor, president of Hong Leong Finance, noted that the demand to borrow against the value of private residential properties to obtain additional cash is growing.

"Retirees want flexibility to monetise their properties during their retirement years. Their needs lie primarily on improving and enhancing their lifestyle and for meeting specific purposes such as renovating their properties for a much needed upgrade and paying for their spouse's private medical expenses.

"With Mortgage Equity@50, we aim to help retirees with their different needs to cash out on their mortgage equity up to 50 per cent of the value, so that they can enjoy the freedom of a better lifestyle and manage the financial challenges. We also recognise that their cash flow and cash urgency needs differ."

It is for this reason that Hong Leong Finance has introduced the additional feature in the loan programme to give customers the flexibility to make early capital payments if they have spare cash, or apply for additional loans quickly if needed, he added.