Cagamas launches another reverse mortgage scheme, this time targeting senior homeowners

KUALA LUMPUR (July 8): Malaysia's national mortgage corporation Cagamas Bhd on Wednesday announced the launch of another reverse mortgage scheme, this time targeting senior homeowners.

Skim Saraan Bercagar Bertempoh, or SSBT, allows homeowners aged 60 to 70 to convert their home equity into regular income streams. The scheme provides access to an upfront lump sum payment and homeowners may choose a fixed payout period, Cagamas said in a statement on Wednesday.

The scheme will be launched initially in the Klang Valley as the first phase of its rollout.

“SSBT is a timely and purpose-driven solution by Cagamas that addresses the financial realities of an ageing population in Malaysia,” said Kameel Abdul Halim, chief executive officer of Cagamas.

Malaysia is already an ageing society, typically defined as a country where at least 7% of the population are aged 65 and above. By 2045, the percentage of people in that age bracket is expected to double, making Malaysia an aged society.

The scheme also comes at a time when four in 10 senior citizens in the country currently live in relative poverty, while the majority of Malaysians are still struggling to build enough reserves for retirement.

“By enabling seniors to convert the value of their homes into fixed term monthly payouts without selling their properties, SSBT supports long-term financial resilience and allows retirees to age with dignity,” Kameel said.

Once the payout reaches the end of its term, homeowners will have options, including property sale or repayment by heirs under SSBT.

However, the statement did not specify who bears the risk if the property value falls below the loan value and whether homeowners will have to cover any shortfall from the proceeds of the sale.

SSBT would be Cagamas’ second reverse mortgage product. The company had launched Skim Saraan Bercagar in 2021 targeting retirees aged 55 and above. The earlier scheme only requires settlement upon the demise of the borrower or joint borrower, whichever occurs later.

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