The mortgage loan for the over-60s
The mortgage loan , also known as an annuity mortgage loan provides that the disbursement of the loan is guaranteed by the affixing of a mortgage on a property owned by the applicant. For this reason, the hypothesis of the mortgage is often proposed to those who cannot offer a payslip or a constant income as a guarantee. With a mortgage loan, the bank guarantees the possibility of recovering the capital and the interest accrued on it if the debtor is not able to repay the installments: at this point, the bank would become the owner of the property and could obtain again the loaned amount, selling it on the market. A loan of this kind can be called an annuity, if offered to users over a certain age, and can even finance the purchase of a house (in that case it would be a mortgage).
The mortgage loan usually has the following characteristics:
- the sum paid can reach 50,000 – 70,000 euros, but can never exceed the market value of the property as a guarantee. Indeed, banks require that the value of the loan never exceed 80% of that of the building;
- the duration of the loan can vary greatly, from 5 to 25 years;
- it is a loan not finalized (its disbursement is not linked to the achievement of a specific purpose, such as the launch of a new economic activity).
A particular form of mortgage loan is the one called the ” life loan “. The annuity is a loan offered to clients over the age of 60, even if the age threshold depends on the specific proposal of the bank. Unlike any other loan, the annuity does not require the payment of monthly installments for the repayment of the capital, but provides for a single payment at the end of the duration of the contract or upon the death of the applicant: this payment will be made by selling the immovable property to the bank warranty. For this reason we are talking about an annuity mortgage loan.
This is a solution designed to help people of a certain age to have access to a loan, without charging the heirs of the payment of the missing installments, in the event of the debtor’s departure. The heirs may still decide to take over the debt, so as not to lose the property. Compared to a traditional mortgage loan, the amount of the annuity cannot exceed 50% of the value of the property and cannot be used for restructuring costs, purchase costs of a property, investment in the applicant’s work activities and financial investments.