Owners of government-subsidised flats are being offered loan guarantees to make it easier to rent or sell their homes on the open market. The Hong Kong Mortgage Corporation is offering guarantees of up to HK$3 million to help Home Ownership Scheme flat-owners borrow money to pay the government premium on their homes, without which the flats cannot be sold or let. The programme, known as the Premium Loan Guarantee Scheme, is one of the measures suggested by the government and the Housing Authority in May to revitalise the market for pre-owned HOS flats. Of more than 320,000 such flats, the premium has been paid on about 65,000. The corporation's guarantee would enable owners to take out second mortgages, which they would repay by instalments along with their first mortgage payments for up to 30 years. The corporation would charge a guarantee fee of 1.8 per cent to 3.8 per cent of the premium loan annually for a maximum of three years. The maximum amount for the second mortgage is either the entire premium or HK$3 million, whichever is less. The second mortgage must be taken from the same bank as the first. The combined amount of the first and second mortgages should not exceed 90 per cent of the property's value, while repayments cannot take more than half of household income. 'The objective is to provide HOS owners with an alternative option without spurring property prices,' a government spokesman said. As 70 per cent of the HOS flats were in urban areas and in built-up parts of the New Territories, broadening owners' financial options might cater for people unable to buy in the presented heated market. Midland Realty chief analyst Buggle Lau Ka-fai said the scheme should help boost turnover of HOS flats, which was only about 2 per cent in the first seven months of this year.