As its name indicates, it is a mortgage that works practically the opposite of a traditional one. Whoever hires him is already the owner of a home and puts it as collateral for the loan, which he receives in monthly installments throughout his life. The mortgagee maintains ownership of the home and can continue living in it as long as he wants. At the end of your days, your heirs will be able to release the mortgage on the home, paying the debt that has accumulated, or sell it and cancel the loan.
But who is the ideal client to take out a reverse mortgage? The first factor to take into account is, obviously, age. By law you have to be at least 65 years old, but experts advise being a little older. The explanation is simple: the amount of the loan received monthly is calculated based on the client's life expectancy, so an older age allows for larger amounts to be received each month. For this reason, entities such as Banco Santander recommend to their clients that during the first years after retirement they make their savings liquid in other products such as pension plans, investment funds, insurance, second homes... and that they take out the reverse mortgage after having consumed other savings.
Another essential requirement is to own a home and reside in it. The home must be located in an area with sufficient commercial dynamism, that is, where it can be sold quickly and prices do not suffer excessive volatility.
These general rules draw a framework in which it is easy to imagine which profiles of people can benefit the most from purchasing a product with these characteristics, what life situations can be alleviated and what problems it can solve.
A clear example of this is the case of Mario, who has just formalized the contract for his mortgage. Mario is 97 years old, a widower, and has lived in his house in Madrid for a lifetime. It is the house that he shared with his wife, where his children grew up and he does not want to leave it. But age advances and Mario, despite enjoying very good health, needs someone to help him with daily tasks and to keep him company. His income could no longer cover the expenses necessary to hire this care and, in fact, he was receiving financial help from his children, something with which he was not comfortable and which was beginning to generate some friction.
Mario's children found out about the existence of the reverse mortgage and immediately understood that there was the solution. Mario now receives a monthly income that allows him to cover all his expenses and live without worries. His children are happy, because not everyone has the same economic situation and for some, helping his father financially was becoming a problem. When the time comes, they will decide based on your situation whether to rescue or sell the home.
Julia had another goal when she approached the bank to ask about the reverse mortgage. She is 85 years old, in perfect health, has no children and she has just become a widow. Julia has a good income, but also many vital future projects that she wants to carry out. She was offered to sell her house in bare ownership, but she didn't like the idea... Very graphically, she explains: “I don't want to live knowing that there is someone wanting me to leave this world as soon as possible.” So, when she started hearing about the reverse mortgage she did not hesitate to ask and what she heard convinced her.
He took out the mortgage with annuity insurance, to guarantee that this optional income will not be interrupted at any time. She now receives about 1,800 euros a month and her only concern is organizing the next trip with her friends from Pilates classes.
Fernanda, 79 years old, was recently widowed. The chalet she shared with her husband is very expensive to maintain and her pension is rather low. Her children live far away, they see each other little and are not in a position to help her. She was quite desperate and she saw no other option but to sell her house to find a smaller, easier-to-maintain apartment. But she was sad, because she does not want to leave her small garden, to which she dedicates so many hours every day, she does not want to give up the small but precious library that her husband built and that together they filled with so many books. over the years.
The reverse mortgage has been their solution. She talked to her children, who encouraged her to keep going. She now has an added monthly income of almost 1,200 euros per month, which allows her to live more peacefully and take care of her house. She is clear that, in a few years, when her mobility is reduced due to her advancing age, she will sell it, but for now she is happy to have found a way to continue enjoying it.
When Ana says she is 85 years old, I want to ask her for her DNI to make sure. She is in perfect health and has a vitality that is envious. She is single and wants to do many things in her life, so she has decided to turn to the reverse mortgage to supplement her retirement income. She contracted the modality with life annuity insurance, because she wants to ensure the extra income of 1,300 euros per month until the end of her days.
She was so happy with the prospect of finally being able to carry out some of her projects, that on the day of the signing before a notary she brought chocolates and champagne for everyone... Let's celebrate the freedom to decide!
