Your time has come: you are going to retire and rest after so many years of work. But your pension is not very high, so you consider ways to complement it with some other monthly income. This article is for you! we tell you what is a reverse mortgage and what are its advantages and disadvantages and how it can be a good option for you.
Find the best mortgage for youWe negotiate with banks to offer you better conditions
Reverse Mortgage: How It Works
When you apply for a reverse mortgage, the bank gives you a monthly money for your habitual residence, which will serve as collateral for the loan while you continue to live in it. These types of financial products are focused on people who meet the following requirements:
- To be older than 65 yearsretired, or have a 33% disability or a high degree of dependency.
- Have a habitual residence free of charges.
At the time of the owner’s death, the heirs have the opportunity to recover that house. To do this, they must assume the debt (repaying the money or remortgaging the home), or else, transfer ownership to the bank.
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Reverse Mortgage: Advantages and Disadvantages
If you are considering ask for a reverse mortgage, you will want to know all the pros and cons of this type of loan. Read on to discover them!
Advantages of reverse mortgages
Let’s go over all the positive aspects of reverse mortgages:
- you get one monthly rent for a patrimony that you are using and that, as an asset, has little liquidity capacity.
- Does not mean losing property directly. You can continue to live in your home until death.
- The heirs have real possibilities of recovering the house:
- They can study the way how to deal with debtselling it if it has increased in value or putting it up for rent for its exploitation.
- Also, many banks are not interested in having a lot of properties in stock, so the recovery by heirs it is more feasible.
- If you have no heirs, removes charge after death: you receive your monthly rent and the bank keeps the house when you die.
- As with other loans, you are backed by the new Mortgage Law of 2019.
Disadvantages of reverse mortgages
You must always take into account the risks of any financial operation that we carry out Like all, reverse mortgages also carry a series of risks:
- Is a interest rate loanwhich is often higher than that of other types of mortgage.
- Involves some expensessuch as the opening commission or the appraisal of the home.
- Rents are not updated over time, generally, so the money you collect will remain the same even if the CPI rises or there is inflation.
- Not granted to all homes. The bank will analyze the feasibility of the operation and will grant reverse mortgages to those profiles that they consider to be of value, according to their priorities.
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I want more information about reverse mortgages
Now you know what is a reverse mortgage and its advantages and disadvantages. Due to its financial complexity, it is advisable that you study your individual situation together with a market expert.
The most convenient way is to contact a broker to get a mortgage: they know what a reverse mortgage consists of, they negotiate with the banks to get the best possible conditions, they present you with options and you choose, without any commitment.
At Housfy Hipotecas we know the financial market and we carry out a indicative analysis of feasibility of the operation, completely free of charge. Contact us!
Find the best mortgage for youWe negotiate with banks to offer you better conditions
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