The inverse mortgage, what is and how is it hired

www.minus19.com

21-01-2009 | Javier Gomez

inverse mortgage

The inverse mortgage arose a few years ago as a way of providing the persons older than 64 years of a complementary revenue to his pension, with the guarantee of its own apartment but without losing the property of the same one and being able to have his use at all times.

Spain is one of the European countries where the best determinants happen for the hiring of this type of products. We are one of the countries that more we advocate the property, especially, formerly. Also, we have one of you give a pension to more falls, on average, of the European Union. And finally, some studies have thought that the Spanish population will be, about 2050, the oldest country of Europe, with 35,7 % of the population overcoming 65 years. At present, they are already 7.200.000 persons those who overcome 65 years, and more than 85 % of them has an apartment in property, and with an average pension for 700 euros. Hardly, at these standards of living, in that also they must confront expenses of light, water, etc. they can have a worthy life in these years after the retirement.

With the idea of helping him in these years, there was designed this formula, the inverse mortgage, like a way of obtaining a complementary money that allows him to survive worthily.

But: what are the characteristics that it is necessary to indicate of this inverse mortgage?:

The inverse mortgage is hired by a time determined previously, that generally usually ranges between 10 and 20 years.
One agrees on a fixed interest, although this one is usually negotiable.
The perceived quantity will be according to the appraisal of the apartment, of the age and sex of the petitioner and the way of receiving the money
The property of the apartment continues of the only form in hands of the biggest and it will be the heirs who receive the apartment and the carried away debt.

As soon as the principal characteristics were seen, I happen to tell the whole process in a more detailed way.

Generally, the inverse mortgage is offered for major than 70 years up to 92 years, although this term one usually extends the persons older than 65 years. These offer his property as guarantee; the apartment is appraised and one agrees on a term during which the owner will be receiving this money. After the term finishes, if the elder is still alive, he will be able only to keep on receiving the revenue if it has hired an annuity insurance. In case of not being still alive and having died before the agreed time, they are the heirs those who take charge of the debt.

These heirs, in this case, will be able to choose to pay well the debt straight or renegotiate it, or to sell the apartment and with the sale to face to the owed quantity.

Nevertheless, also it is possible to hire an annuity insurance. There becomes Ésto in order to cover the contingency of which it goes over in the established term, and the elder is still alive. On having had the employed insurance, he insures himself of keeping on receiving the revenue until now of his death. The problem that presents this insurance is that it is usually very expensive, and sometimes, it reaches up to 1 % of the value of the appraisal of the housing, which will have to be paid on having been hired or having included it in the inverse mortgage with what he would receive less of revenue from himself every month.

How to receive the revenue? the person older than 64 years can choose to receive suddenly all the money or do it in the shape of revenue that him will be subscribing every month until the term comes (if it has no insurance) or up to his death (if it has insurance).

What happens on having come at the end of the agreed term? since we have said, the following options can happen:

It has no insurance, the agreed term is finished and the biggest is still alive: he will not be able to keep on receiving the revenue.
It has insurance and the term agreed with the Bank is finished: nothing happens since it is the company of insurance the one that keeps on paying.
After the death of the owner or the last one of the beneficiaries: they are the heirs those who face to the debt selling the apartment or paying the debt.

In a next article we will shell some considerations that it is necessary to bear in mind at the time of considering the hiring of an inverse mortgage.

To read more on: Mortgages, financial Products, finance
Related articles:

very good article. quite very well explained. since I suppose that you will know, Caixa Sabadell is of few Spanish entities that it offers this product (it calls him a Pension Housing). if it serves to you as utility for this next article, in the signature I leave a linkage to you to the site of the product, with enough information about the topic and a pretender.

greetings!
Comment for Caixa Sabadell
30-01-2009 12:14

(Required) name

Mail (required and not public)

URL