Spaargids.beBuying a home doesn’t have to come with a big mortgage loan. An annuity purchase also gives you the option of buying your own home. But what exactly is an annuity? What are the pros and cons? And how popular is it? Spaargids.be understood everything.
Edited by Gianni D’Angelo, in collaboration with Spaargids.be
Last update:
09:09
Bron:
Spaargids.be
With an annuity purchase, you don’t pay a one-off amount: you pay the total purchase amount in parts or installments. Usually such a purchase is accompanied by an advance, known in the industry as a “bouquet”, and monthly interest, usually indexed. As the interest payer, your payment obligation ends on the death of the beneficiary or if the term stipulated in the contract has expired. For this reason, senior citizens are usually the selling party in an annuity sale.
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Full ownership, usufruct and bouquet
There are several options for buying or selling an annuity. In the event of a freehold sale, the buyer can immediately settle in the house. Usually, however, the sale is made on an annuity in usufruct. In that case, the seller can continue to live in his house until his death.
With an annuity sale, the parties can choose a limited or unlimited term. In the first case, it is fixed how long you have to pay interest to the seller. With an unlimited duration, the buyer pays monthly interest to the seller until the latter’s death.
When you conclude a purchase or sale on an annuity, you can opt for a deal with or without a bouquet. Such a bouquet is an agreed advance. The amount is usually between 10 and 20 percent of the home’s value. Another option with buying or selling an annuity is whether or not to provide indexed interest. If indexation is chosen, the interest is adjusted to the increase in the cost of living.
The amount of the annuity depends on the seller’s age and life expectancy. The determining factor is therefore how long the seller has on average to live. To calculate it, a notary uses mortality tables.
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What are the benefits?
A purchase or sale on an annuity offers benefits for both the buyer and the seller. A buyer can quickly become the homeowner if the seller dies earlier than expected. Also, he is not obligated to take out a home loan because he doesn’t have to pay the amount in one lump sum. An important note here: Property from an annuity purchase cannot be used as mortgage collateral.
If there is a bouquet, he can possibly take out another credit, such as a personal loan.
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This is the great advantage for the seller: while continuing to live in the house when he sells in usufruct, he earns monthly interest. He therefore has a higher regular income. If the interest is indexed and there is a general increase in prices, the seller will receive a larger amount. If the house has been sold to a private individual, the seller does not have to pay interest taxes.
What are the disadvantages?
In addition to the advantages, there are also disadvantages. Buying an annuity home can be expensive if the seller lives longer than expected, unless both parties have specified a deadline for paying interest in the contract. Furthermore, as a buyer you are not entitled to a tax rebate. Sometimes the bouquet is quite high, so you have to go to a financial institution for a loan. The costs for buying a rented house can be higher than for a traditional sale.
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After the sale with usufruct, you as the seller are no longer the owner of your home. If the seller lives longer than the agreed due date of the interest payable, he will no longer be entitled to an annuity after this due date. He could, however, continue to live in the house.
Popularity of buying and selling on annuity
Buying or selling homes with an annuity is nothing new. According to real estate specialist Trevi, it is more rooted in Brussels and Wallonia than in Flanders, but the company sees a positive evolution. According to the real estate site Immoweb, between 1 January and 30 September of this year, 8.1% more rental properties were offered than in the same period last year (1,448 in 2021 and 1,566 in 2022 ). Trevi says demand for rental homes is greater than supply.
Still a fan of the classic home purchase through a mortgage loan? Via the box below you will find the best home loans for your specific situation and budget.
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