By Somluck Srimalee
Reverse-mortgage loans are among financial products that could help citizens as the country moves to an ageing society, according to Government Housing Bank (GHB) president Chatchai Sirilai.
“We have set aside Bt1 billion for reverse-mortgage loans at this first stage as the latest move by Government Housing Bank to address this issue. This will cover Bangkok and the suburban market for customers aged over 60 but not above 80 years, and who also own residences and need more funds for their life needs,” he said.
The loan can be up to 50 per cent of the appraised value of housing but not over Bt10 million per unit. The reverse-mortgage loan will offer an interest rate of 6.25 per cent a year for the period of the loan contract.
Under the contract, the bank will pay money monthly to its customers throughout the contract life.
For example, a reverse-mortgage loan of Bt2 million could be approved for a customer aged 65 under a 20-year contract. The customer would receive a Bt8,300 monthly loan payment through to the contract’s end.
“This is the model to help an ageing citizen who has the asset, but does not have the income to use the asset. The citizen could get the loan to spend on their way of life,” Chatchai said.
Since the new financial package was launched, five GHB customers have shown interest.
The bank also boasts a policy to provide project loans at a special interest rate to developers planning residential units for ageing people, said Chatchai.
For example, the bank has signed a memorandum of understanding with Thammasat University to provide a Bt5-million loan to develop its Innovation Hub at Pattaya. The investment budget of Bt5 billion will see 24,000 square metres of land developed for the innovation and medical hub.
The project features 10 buildings including a co-working space, a “smart space for active learning” and a business co-working space. The project will also house a medical centre hub with specialist medical care such as dermatology, cardiology, orthopaedics, ageing care and others.
“We provided a loan for its prototype project that will cover ageing medical care. If it is a success, it will be part of the country’s support to facilitate the needs of ageing people,” Chatchai said.
He added that the reverse-mortgage loan is one among a variety of tools needed to serve the country as it transitions to an ageing society. The key to improving the quality of life is to develop the country’s medical care to serve the demands of the ageing sector.
Government Savings Bank (GSB) is another bank to offer reverse- mortgage loans to its customers, a service it launched in 2017.
GSB has allocated Bt10 billion for the loan scheme.
According to its reverse-mortgage loan policy, the bank credit is capped at a maximum of Bt10 million per loan.
Its chief executive and president Chatchai Payuhanaveechai said recently that reverse mortgages serve to convert home equity into cash for seniors. Those aged 60-80 years and who have a debt-free home within Bangkok and suburban areas are eligible to seek a reverse mortgage.
The loan has a maximum term of 25 years, but the borrower’s age may not exceed 85 years when the loan term ends, he said.
“This is a part of supporting the country as it moves to an ageing society,” he said.
Istanbul’s model for the aged
Following the design of financial package to serve Thailand’s ageing society, GHB president Chatchai said his bank has been studying how overฌseas countries, including Japan and Turkey, are approaching their ageing societies.
They learned that Darulaceze Baskanligi, an institute in Istanbul, was established in 1896 to help care for lower-income people and the aged at the time of a war between Turkey and Russia. Till now,
Darulaceze has continued to help lower-income people aged over 65, as well as children without a family to care for them. The institute currently houses 510 people, 18 of them children without families and the remainder aged over 65, said a Darulaceze staff member.
The facility has a 560-bed capacity.
Up to 70 per cent of the institute’s income comes from donations and the remaining 30 per cent comes from those housed in the facility if they have the income to contribute. If they lack income, they are allowed to remain free of charge if they meet the criteria, she said.
Most of those who can pay their 30 per cent contribution to Darulaceze donate about 7,000 Turkish lira (about Bt42,000) yearly, mainly from their pension funds or from a reverse-mortgage loan, she said.
She added that the institute also welcomes people who remain in their homes but work at the Darulaceze doing painting, weaving or other skilled work. The institute pays them a monthly income.
“We learned how to take care of ageing people and improve their quality of life, and the number of ageing people was up to 17 per cent of the country’s total population in the year 2017. The country will soon move to an ageing society,” she said.
GHB's president Chatchai added that reverse-mortgage loans are one way to support ageing people, ensuring they have money to spend when they retire from their work. Meanwhile, the government must also implement other measures to take care of all of them, especially in the health management system.
“When we talk about homes for the aged as a way to support ageing people, we must not only provide reverse-mortgage loans for them. Developers have to be concerned about the health system that is necessary for ageing residents, because ageing citizens need a better healthcare system to meet their lifestyle,” he said.