The reverse mortgage is a mortgage loan whose fundamental objective is the monetization of a real estate that completes the pension once retirement arrives. It is a very useful financial product that has been very well received in the United States and Great Britain but here in Spain is beginning its takeoff.
What does it consist of? Is it worth it? Who is it for?
We tell you all the peculiarities of this mortgage in this post.
Reverse mortgage: is it for me?
The reverse mortgage is designed for people with a certain profile. Over 65 years old, retired and with a home in property. People with a degree of disability greater than 33% can also access this financial product.
The Bank of Spain itself offers an informative guide on this product for those who want to consult all the details.
What is your procedure?
What you will get if you are granted a reverse mortgage are a series of monthly annuities for life for your house while you can continue to use and enjoy it.
When they reach the age of 65, many people realize that their retirement pension is insufficient. Remember that the minimum pension in Spain is € 642.90, so if you own a home you can increase your income level.
Although it can be requested from the age of 65, banks can reserve the right to grant them from the age of 70 or the age they consider. The later it is requested in time, the greater the amount to be received.
How much rent is obtained with the reverse mortgage?
This will depend on the type of housing we have. Here comes into play the appraisal of the property. The better valued it is, the higher incomes will be obtained. It also influences the way in which they are charged. It will not be the same to request the entire amount at once than periodically. The most common form and objective of this mortgage is to receive income on a monthly, quarterly or semi-annual basis.
Main features of the reverse mortgage:
1.To access it, the appraised value of the property must be at least € 150,000.
2. The location of the dwelling must be in a population of more than 45,000 inhabitants.
3.Once the appraisal has been carried out, the entity grants the owner an amount ranging from 30% to 40% of it.
4.The reverse mortgage can have more than one owner. A marriage for example.
5.The applicant will never lose ownership of the house, it will always be his.
6.The debt that will be generated during the years of concession, will be assumed by the legal heirs once the death arrives.
They can do this in three ways:
* Settle the debt with own funds and keep the house.
* Sell the house and pay the debt that is with the bank keeping the surplus.
* Applying for a new mortgage on the house to assume ownership.
7. The heirs will have one year to decide what they want to do with the property.
8. The reverse mortgage can be cancelled at any time and without commissions.
Can I apply for a reverse mortgage if I still have the home mortgaged?
Ideally, the property should be free of charges when we request it, however, it is possible that the entity grants us a higher amount of reverse mortgage to settle the debt.
Can the income from the reverse mortgage be finished?
If, for example, you contract with 70 years for a period of 10 years, at this point the rents will end. What to do then?
The solution that banks usually present is to take out deferred annuity insurance. You have to be cautious because these insurances are usually very expensive and banks charge them in a single payment at the beginning of the loan.
If you think that this product fits your profile or in any of your environment we will be happy to study the operation to offer you the best conditions.