Requirements to contract a reverse mortgage

Surely you have heard more than once about the reverse mortgage, a mortgage loan exclusively for people over 65 years of age or with high dependency. But what is a reverse mortgage? The first thing is to own a home, we will tell you the rest in our article. In any case, at Housfy Mortgages we have experts available to answer all your questions. Find the best mortgage without mistakes Going from bank to bank is a thing of the past. GET INFORMED FOR FREE What is a reverse mortgage in Spain? The reverse mortgage is a type of mortgage loan focused on people over 65 years of age or who are in a highly dependent situation. Through the home warranty, the owner obtains a monthly payment for a specific period of time, which can sometimes be extended until the owner’s death. So how does the reverse mortgage work? It is basically the opposite of a normal mortgage. The only difference is that the owner of the home in question does not have to pay, since he is the one who receives the charges from the bank, as if it were a monthly rent. And all this without having to leave the comfort of your home. This amount, which is not taxed on personal income tax , is not returned during life. Even so, once the owner dies, the heirs have a certain amount of time to repay the loan and the interest. Recommended reading: Euribor forecast in Are variable mortgages going to rise?

Types of reverse mortgages

Currently, we can find different types of reverse mortgages, which vary mainly based on the time during which the payment is obtained. They are three: Temporary reverse mortgage. The monthly fee is received for a certain period of time. Lifetime reverse mortgage. The monthly fee is for the entire life of the holder, with no expiration date. Single Draw Reverse Mortgage. A single payment is made based on the value of the property and is paid at the beginning of the mortgage. Reverse Mortgage Requirements Taking out a reverse mortgage has requirements , which may vary depending on the bank with which the reverse mortgage is processed. First, let’s see who can apply for it: People over 65 years of age. Retirees. People with a high or total degree of dependency. Be the owner of a home (partially free of charges). If you are going to request a reverse mortgage , it is essential to know that the home must be owned and free of encumbrances. It will have to be the habitual residence and exceed the minimum habitability requirements.

How does the reverse mortgage work?

How a reverse mortgage works can be confusing for many people. Therefore, below we list the essential characteristics to better understand this type of mortgage loan: The owner never pays the amortization installments or interest. Taking out a reverse mortgage does not imply the loss of ownership of the property. The duration of the mortgage can be extended until the death of the owner , which is why life insurance is most often included. The home appraisal should not have a minimum for it to count as a guarantee. Advantages Some of the advantages are the following: You will obtain short-term liquidity without having to sell or rent the home. The house remains the owner’s. Even if you mortgage your house, you can continue residing in it. The money that the bank pays you is not returned. This procedure will be up to your heirs. Disadvantages Even so, there are also certain disadvantages to take into account: The interests are higher than those of any other mortgage loan. Debt increases over time . Therefore, the borrower will owe more money than the appraised value of the home. The heirs are the ones who finish paying the debt , if they want to keep the mortgaged property. Recommended Reading: How to Calculate Mortgage Interest [Easy Guide] What happens to the heirs in the reverse mortgage? When the homeowner dies, the heirs not only receive the property in question. The debt linked to the owner also falls on the heirs . In this situation, the available options are: Pay the debt and interest on the mortgage loan and recover the home. Sell ​​the home to pay off the debt with the bank. Remortgage the property to pay for it. It could also happen that the heirs do not accept the inheritance . In that case, the corresponding banking entity would be in charge of executing the mortgage guarantee.