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The Premium Loan Insurance Scheme (PLIS) is operated by The Hong Kong Mortgage Corporation Limited or its subsidiary (Insurer) for owners of subsidised sale flats who are aged 50 or above and wish to settle land premium payment to the Hong Kong Housing Authority (HA), the Hong Kong Housing Society (HS) or the Government.
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What is a PLIS loan?
PLIS loan is a loan arrangement. Under the PLIS, borrowers will be granted loans against their subsidised sale flats as security primarily for settling land premium payment to the HA, the HS or the Government. Although borrowers mortgage their properties in favour of lenders, they remain as owners of their properties. After settling the land premium payment, borrowers will have greater flexibility in letting or selling their properties in the open market. In general, a borrower does not need to repay his PLIS loan and can stay in the property during his lifetime, unless the PLIS loan is terminated under certain circumstances.
When a PLIS loan is terminated, a borrower (or his personal representatives) will have the preferential right to redeem the property by repaying to the lender in full the outstanding loan amount owed by the borrower under the PLIS loan.
If a borrower (or his personal representatives) does not exercise such a right, the lender will be entitled to sell his property to settle the outstanding loan amount. If the sale proceeds from the property exceed the outstanding loan amount owed by the borrower, the lender will pass the surplus to the borrower (or his personal representatives). If there is any shortfall, the borrower (or his inheritors) needs not worry as the shortfall will be borne by the Insurer under an insurance arrangement between the lender and the Insurer.
In general, the applicant and the property must:
- be aged 50 or above and a holder of valid Hong Kong Identity Card
- not be an undischarged bankrupt or otherwise subject to bankruptcy petition or individual voluntary arrangement
- be a residential property Note 1 under the Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme of the HA, the Flat-For-Sale Scheme and Sandwich Class Housing Scheme of the HS, or any other schemes accepted by the Insurer from time to time with outstanding land premium to be paid up
- be held in the applicant s own name, or in joint names among the applicants (up to three) as joint tenants Note 2
- not exceed 50 years of age Note 3
Note 1: Where the property is subject to a mortgage, such mortgage will have to be discharged on the date when the PLIS loan is drawn down.
Note 2: All joint tenants must be co-borrowers under the PLIS loan, and must satisfy the relevant eligibility criteria.
Note 3: Property exceeding 50 years of age will be considered on a case-by-case basis and subject to building inspection.
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Note 4: Borrowers may choose to finance in the PLIS loan the commission paid to the licensed estate agents for letting their properties, which are mortgaged under PLIS loans.
Note 5: Supporting documents are required for each such lump-sum payout application. Other purposes not listed above may be considered on a case-by-case basis.
Note 6: Under the fixed-rate mortgage plan, any request for further lump-sum payout after the first drawdown will be considered on a case-by-case basis.
Note 7: Each partial repayment will be subject to a handling fee of HK$1,000. The minimum amount for each partial repayment and the minimum outstanding loan balance required to be maintained are both set at HK$100,000. Such fee will be financed in the PLIS loan.
In general, the older the borrower and the higher the open market value of the property, the higher will be the maximum lump-sum payout amount. If there is more than one borrower, the entry age of the youngest borrower will be used for calculation of the maximum lump-sum payout amount. Table 1 below shows the maximum amount of specified property value for lump-sum payout calculation. Table 2 below shows the scale of maximum lump-sum payout amount under the floating-rate mortgage plan (per HK$1 million of specified property value) at the entry ages of 50, 60, 65, 70 and 80 respectively. For the maximum lump-sum payout amount under a fixed-rate mortgage plan, borrowers can approach banks for details. In general, the maximum lump-sum payout amount under a fixed-rate mortgage plan is higher than that under a floating-rate mortgage plan.
The primary purpose of the PLIS lump-sum payout is to settle land premium payment. If the borrower borrows only part of the maximum lump-sum payout amount for the land premium payment, he may apply for further lump-sum payout Note 8 up to the maximum lump-sum payout amount for other specific purposes such as repayment of an existing mortgage, payment for home improvement, repair and maintenance of his property and the fees payable to the relevant solicitors and medical practitioners in connection with the enduring power of attorney or application for a court order under Part II of the Mental Health Ordinance.
If the maximum lump-sum payout amount is fully drawn by the borrower at the first drawdown, he will not be allowed to apply for further lump-sum payout thereafter unless he has made partial repayment to the PLIS loan after the first drawdown and the redrawn amount will be capped at his repaid amount Note 8 .
Note 8: Under the fixed-rate mortgage plan, any request for further lump-sum payout after the first drawdown will be considered on a case-by-case basis.