Stiftung Warentest warns: what expensive traps are hidden in the partial sales of real estate
Those who want to retire their home without having to move have three options: partial sale, complete sale or mortgage. As Finanztest has now established, two of these options are significantly better than the third. The details are also worth looking at.
Older people can supplement their pension by lending or selling their property and agreeing to live there for life. Anyone who observes simple principles will get much more money and better services without any disadvantages.
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1. Partial sale
Although partial sale currently dominates the market, recommend financial test basically from it. In a partial sale, homeowners sell part of their home or property apartment against immediate payment.
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Finanztest lists many reasons against this “partial sale” option:
- Monthly too expensive: Residents have to pay the buyer a usage fee which is more expensive than the interest on a loan. Some providers set the fee for only a few years or not at all and then increase it.
- High one-time payments: Vendors often pay for maintenance and repairs after the move. They could cost a lot of money.
- High risk: Buyers can usually be assured that they will make their investment or even a minimal profit when the property is subsequently sold. If they don’t, the seller has to step in. It bears the risk of losses in value, but does not benefit from increases in value.
Finanztest concludes that the partial sale corresponds to a loan in which the seller bears the performance risk. Full sale or credit usually offer better alternatives.
2. Entire sale: carefully evaluate the usufruct or right of residence
Anyone who sells their property completely, but wants to continue living in it free of charge, can agree to a right of residence or a so-called usufruct:
- That right of residence only applies to registered persons. If these are withdrawn, the buyer can either rent or sell the property. In return, the buyer pays the maintenance costs unless the contract specifies otherwise.
- Of the usufruct makes the seller the beneficial owner until the end of his life. If he moves, he can rent the house or apartment himself or give it to relatives. In return, a usufruct agreement lowers the selling price. The seller also pays for maintenance. If he prematurely renounces the right of usufruct, he can demand an advance payment.
If you no longer want to use your property after the move, you can save money with a right of residence. Anyone who wants to keep the back door open for rent or family use resorts to usufruct.
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In principle, sellers should not have too high expectations of possible prices: According to Finanztest research, those who want to continue living in the sold property only receive around 40 to 50 percent of the sale price without usufruct and right of residence.
More on the topic: Life annuity, usufruct, partial sale – plus income by selling the property: you have to be careful of these pitfalls
3. Life annuities are only valid in old age
If you sell a house or apartment, you can get an annuity instead of an immediate one-off payment. Lifetime pensions have become rare, but according to the financial test, they only count if the beneficiaries are significantly older than the average life expectancy.
According to the financial test, temporary annuities result in fair offers which correspond to an immediate payment including savings interest in the final amount.
4. Credit protects property
Anyone who wants to turn their property into money without selling it borrows it. If the borrower dies, the heirs can pay the amount and move, rent or sell the property. The loans are therefore particularly suitable for elderly people who want to keep a property in the family after their death.
You have three options:
- reverse mortgages , where senior citizens regularly receive money from the bank and their debt level increases due to this, according to the financial test, costs about six percent interest per year. They are particularly suitable for seniors who appreciate regular cash receipts.
- Amortized loans , which the bank pays in full immediately, but the borrowers pay only the interest on the loan, are cheaper than reverse mortgages at four to five percent interest. Interest accrues immediately on the total amount, rather than just the portion paid so far. They are therefore particularly suitable for seniors who need a lot of money in the short term.
- credit lines allow seniors to flexibly obtain and pay money from the bank. Interest rates are currently low at around two percent, but could go up incalculably. Finanztest recommends using credit lines only for short-term bridges.
Most banks offer all three options for only up to half the value of the property.
5. Be sure to check contracts
Finanztest sent test people who got offers for their properties. In most cases, despite requests, they have not received model contracts for a preliminary check. The completed contracts arrived just 14 days before the notary was appointed, but according to the financial test they included up to 42 pages of legal regulations. Hardly understandable for normal customers, states the financial test and advises to always have contracts checked by specialist lawyers.
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