Cagamas mortgage program gains ground

PETALING JAYA: Cagamas Bhd’s reverse mortgage program called Skim Saraan Bercagar (SSB) has been attracting interest and matching expectations from mortgage companies since applications opened on January 17, 2022 in Klang Valley.

Despite launching in January this year, the reverse mortgage for retired homeowners only saw its first applicant in March 2022.

“Applicants must undergo an eligibility review and financial counseling by the Employees Provident Fund and the credit counseling and debt management agency to ensure they have a good understanding of SSB” , Cagamas CEO Datuk Chung Chee Leong told StarBiz.

Cagamas did not reveal the number of applicants for the SSB program but said that in terms of location, Selangor had the highest number of applicants at 66%, followed by the Federal Territory of Kuala Lumpur at 34%. More than 50% of the applicants here belong to the age group of 55 to 69 years old.

“It shows that the awareness of SSB among the younger age group is higher than that of the older age group. It also indicated that most of the candidates are internet literate,” Chung said.

The release of the data by Cagamas showed that 41% of the candidates were aged 70 or over.

The most popular payout combination among applicants is the “lump sum and income stream” category, which accounts for 54% of the sum of applications, while 46% of applicants chose the “income stream only” option.

“Most applicants use the availability of lump sum disbursement in SSB for very specific reasons, i.e. for medical bills, property renovation or paying off their outstanding mortgage to redeem their property from the financier,” Chung said. .

Single men made up the largest number of applicants at 49%, while single women and couples each made up 26%.

Not surprisingly, Cagamas noted that 91% of applicants had freehold property.

SSB enables retired Malaysian homeowners, aged 55 and over, to convert their residential real estate asset into a fixed source of monthly income so that they can have financial security through a fixed source of monthly income throughout their years of retirement.

The scheme does not require borrowers or joint borrowers to make any repayments during their lifetime and repayment of the loan will be made upon the death of the borrowers.

Any outstanding loan amount will be settled by sale of the property and the balance of the sale proceeds will be passed on to the borrowers estate.

Cagamas said that based on the experiences of similar programs in Korea and Hong Kong, educating the retired population to promote reverse mortgage is essential because once people understand the benefits of reverse mortgage , the growth momentum will continue to develop.

“We expect SSB turnout to increase even further later this year once we launch the Islamic version of SSB and expand the SSB product line beyond Klang Valley,” he said. he declared.

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