Mortgage plan draws centenarians

The government’s housing pension program, the reverse mortgage, still continues to attract senior citizens, including centenarians.

In the first three months of this year, 3,927 signed up for the program, a 64.7 percent surge compared to the 2,384 during the same period last year.

The state-run Korea Housing Finance Corporation said it also is the largest number of new subscribers quarterly since the reverse mortgage program was introduced in July 2007.

In fact, last month a 107-year-old Gwangmyeong, Gyeonggi, resident became the country’s first centenarian to sign up for the reverse mortgage, receiving 1.68 million won ($1,465) a month. The previous oldest recipient was 99 years old. Since then, 17 centenarians have signed up for the program, with the eldest being 111.

The spike in subscription this year was largely attributed to the change in reverse mortgages in February. Those who applied for the program are now receiving a smaller amount than those who signed up earlier.

“The housing pension, which celebrates its 10th anniversary this year, has settled as a mean in helping elderlies in stabilizing their life,” said an official with Korea Housing Finance Corporation. “We will continue to work persistently so that more elderlies could benefit from the housing pension.”

Currently the average age of the people in the reverse mortgage program is 71.7 while apartment values that have been put up as collateral average 285 million won. The monthly handout averages 985,000 won.

The largest group of seniors receiving the housing pension are between 70 and 75, which accounted for 26.3 percent while those between 65 and 70 made up 21.5 percent. Recipients between 75 and 80 made up 21 percent.

Recipients who received monthly payouts between 500,000 won and 1 million won accounted for 43.5 percent followed by those who received between 1 million and 1.5 million won with 21.1 percent. Those who received more than 2 million won a month took up 7.2 percent.

Apartments whose values were between 100 million won and 300 million won were put up for collateral the most for the reverse mortgage at 56.3 percent followed by those between 300 million won and 600 million won at 31.9 percent. Those that were worth less than 100 million won only took up 6.2 percent while those exceeding 600 million won were 5.6 percent.

The housing pension only accepts applicants who are 60 or older and the recipients receive a monthly loan in the form of an allowance until their death while putting up their apartments as collateral.

In the past, seniors passed on their property to their children. However, since the financial program was launched it has gained popularity among senior citizens but also their children who have been supporting a growing number of aging parents, thanks to medical advances that have increased life expectancy.

Retirees can receive monthly income while still living in the home they own, and when they pass away, the bank that sold the reverse mortgage gets ownership of the house. If a retiree’s accumulated loan amount from the reverse mortgage scheme is below the home’s value, the children can inherit whatever’s left after the bank sells the house.

It’s also a win for the government as seniors will be able to spend more, helping to increase the nation’s domestic consumption.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]