When you are a pensioner over 65, there are few solutions available to improve your financial situation apart from the introduction of an additional credit or purchase of mortgage credit.
Some banks or credit agencies offer to remedy this mortgage life loan. This offer allows people over 65 who own a home, to borrow money while remaining legally the owner of the property put in guarantee to improve their incomes or to finance a personal project.
The borrower gets a loan secured by a mortgage on his property. Not to be confused with a sale in life or a classic mortgage (A person who contracts a classic mortgage must repay the lender or his property will be seized.)
This product allows the borrower not to pay monthly repayments while improving his income and has no legal obligation to repay the loan during his lifetime. In this case, the banks repay themselves on the death of the borrower, selling the property.
Improve your income with the mortgage life loan
The mortgage life loan, allows people over 65 years of age to obtain additional cash. The borrower can apply for a loan from the bank or credit institution of his choice which will then set the loan amount according to 3 criteria:
- The value of the property to be determined by an expert chosen by the borrower or lender.
- The age of the borrower: The younger the borrower, the larger the amount can be.
- Gender: Men, with a shorter life expectancy than women (79 for men and 85.1 for women in 2016), are thus favored by the mortgage life system.
If the application is accepted, the proposed capital will vary depending on the value of the property in general 15% to 75% of the value of the property. The lender will have to set an interest rate (APR) that will be used in the event of early repayment or if the heirs wish to keep the property. The lender is free to set his rate. This type of loan does not require a medical file, proof of income or even age limit.
Protecting your heirs with the mortgage life
Nobody repays the mortgage life loan. Neither the borrower nor his heirs. Upon the death of the borrower, the bank repays itself directly with the mortgaged property. The mortgage annuity thus allows the heirs not to have to bear the repayment of a loan after the death of the borrower. They also receive the difference between the sale price of the property and the amount of capital of the mortgage life.
If this difference is negative, they are protected from indebtedness since the bank bears the loss and can not claim anything from them. However, if the heirs wish, they can recover the mortgaged property by repaying the credit.