The state-owned Government Savings Bank (GSB) has loosened reverse mortgage lending criteria by waiving a requirement for consent from the borrower's cousins in an effort to enable the elderly to better access the loan.
The bank's reserve mortgage lending was subdued because of the requirement that cousins must provide consent for the loan, said president and chief executive Chatchai Payuhanaveechai.
Relatives were reluctant to comply with the requirement for fear that they had to jointly take responsibility.
This year GSB has extended 400 million baht worth of reverse mortgages, Mr Chatchai said.
Reverse mortgages allow elderly homeowners to convert their home equity into cash with no loan repayments until the borrower dies to help cover monthly living expenses and healthcare costs.
Those who are eligible to apply for GSB's reverse mortgages are Thais aged between 60 and 80 who own a debt-free property. The borrower must also be fully competent and of sound mind.
The borrower's spouse, who also has to be between 60 and 80 and have joint ownership of the home, may also apply for the loan as co-borrower, in which case, the monthly payment can be made to one or both of the borrowers with the proportion agreed when the loan is made.
Properties used as collateral for GSB's reverse mortgages must be houses or condominiums built by property developers, owned by the borrower, with a minimum appraised value of 1.5 million baht.
The loan amount, which includes principal, interest and other expenses such as fire insurance premium and mortgage fees, will not exceed 10 million baht or 70% of the appraisal value for low-rise homes, or 60% for condominiums. The bank's reverse mortgage has a maximum maturity of 25 years.
Mr Chatchai said reverse mortgages will gain in popularity as nuclear families with only one child become more common in Thailand and senior citizens must look after themselves to afford the cost of living in retirement.
Apart from reverse mortgages, GSB is offering occupation loans for the elderly. The maximum age was recently raised to 70 from 60, Mr Chatchai said.