Do you have retired parents living in Klang Valley? Well because if you do, you’ll most likely want to read more about this..

There’s a new scheme in town called the Skim Saraan Bercagar which actually allows retirees aged at least 55 years and above to ‘convert’ the total value of their home into a monthly source of income. This basically means that they will be borrowing against the total value of their fully paid home. So if the total cost of their home is RM500,000 then this amount would then be converted into a ‘monthly allowance’ of sorts for them from the bank, but of course rather than a “here you go, you don’t need to pay us back, enjoy!”, repayments would of course need to be made. Thus, this type of scheme is known as a reverse mortgage loan

What are the benefits?

Well, firstly there’s the lifetime tenure, meaning that Cagamas will be providing a monthly steady cash flow to the borrower for the entire duration of their lifetime (subject to T&C’s), which can be used for any purpose they see fit, reducing their dependency on other family members.

Secondly, repayments would only begin after the passing of the borrower or when both joint borrowers have passed away. So during the borrower’s lifetime, no repayments will need to be made at all.

Third, the borrower will be able to continue living in their own home throughout their retirement years and their entire lifetime during the duration of this loan period.

Finally, as this is a non-recourse loan, even after the owner passes, if the amount collected by the bank from the sales of the property put up is less than the amount loaned, neither the borrower’s family nor estate will need to be responsible or be in charge of settling any outstanding SSB loan amount.

How’s the repayment process?

Well, as previously mentioned, no repayments will need to be made during the lifetime of the borrower – nope, not a single cent. But, it will begin as soon as the borrower or, if they have decided to opt for a joint loan, repayment will begin as soon as both parties have passed away.

The way this works is that, the property that had been put up to the bank to be converted into cash flow will then be sold in order to settle any of the outstanding loan amount that has been borrowed during the borrower’s lifetime, and any extra balance that’s been made from the sale of the property will then be passed on to the borrower’s estate. But if the borrower’s family decides that they want to keep the property, then they would need to come up with the repayment amount, essentially ‘repurchasing’ the property back from the bank.

Who’s eligible?

BORROWER : 

• Must be a Malaysian citizen
• Residence of Klang Valley
• Aged 55 years and above
• Be the owner or joint owner of a residential property
• Joint borrower(s) can be an immediate family member subjected to age limit

PROPERTY :

• Home must be a residential property in Malaysia under either the borrower or joint borrower’s name
• If a joint Skim Saraan Bercagar (SSB) loan is chosen, the residential property must also be jointly owned
• Property must be the primary and current place of residence
• It must be free from any and all financial liabilities such as mortgage and loans

Now that’s about the gist of this scheme! If you’ve got any burning questions about this scheme, or think that this could be the right fit for your parents or any retired individual you know, then go ahead and schedule an appointment at either EPF Kuala Lumpur or EPF Petaling Jaya Services Counter OR visit ssb.cagamas.com.my. But if you don’t think it’s something for you or your family, then perhaps you should give your parents a call to check on them every now and then and check out other schemes that are available while you’re at it, cause there’s plenty of others, so one of them might just be the right one for you!

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