The inverse mortgage

The inverse mortgage can be a solution to complement the scarce pensions of the Social security. It is the form that the housings owners have to gain access to the money that they were accumulating during all his life as capital in his housings. In Spain the inverse mortgage can be requested by persons retired from 65 years of age or proprietary dependent persons of a housing without charges.

By means of the inverse mortgage “it borrows” money during a term of concrete time (generally between 10 and 20 years) against the value of his housing, but without resigning her. This money can be received well in the shape of the only payment, in the shape of monthly payments or in the shape of credit line of who is getting ready up to the entire limit of the given funds. The housing on which an inverse mortgage is realized can be both the habitual housing and any other building and the owner will be able to keep on using it up to his death. In fact, the bank will not need that the money is returned until the housing is sold or the owner dies. The banking institutions usually the hiring of an insurance of annuities for, if one lives through more time of the term of the mortgage, keep on receiving the monthly revenue advise.

The alternative to the inverse mortgages to put in value the housing and to achieve liquidity there are the sale and the rent. In both cases the housing has to give in and to look for other one and this is neither the ideal thing nor the wished for major that they want to keep on living in his house.

The inverse mortgages can only be granted by the credit companies and by those insurance entities authorized to operate in Spain. At present few entities offer it between his products.

Options of the heirs

When there die the holders of the inverse mortgage, his heirs will have to return the quantities that the biggest person has been receiving. The heirs have two options:

• They can remain with the housing and return the loan with your own savings or obtaining another type of financing
• To sell the housing and to return the debt contracted by his ancestors with the bank.

Fiscal advantages

The inverse mortgages are provided with a series of fiscal advantages gathered in the text of the new mortgage law, of course, only for those who should do it on his habitual housing: the monthly quotas received from the inverse mortgage are exempt in the income tax return. The inverse mortgage also is exempt from the payment of the Tax on Transmissions and Documented Juridical Acts. Also, the same reductions are applied in notarial fees and register to them that for the cancellation, substitution and novation contemplates the reform of the new mortgage law.

Disadvantages

The principal disadvantages that exist are:

• It bears the expenses of constitution of a mortgage, like any other one, more the annuity insurance, if it is hired
• As in any other type of bank loan, the entity will receive an interest, concerning 5 % at present
• It can be seen like a loss of the patrimony achieved during the whole life or a decrease in the future heredity of the family