Over 65: The Mortgage Loan Annuities
by admin on 27/12/08 at 11:38 am
“If you have more than 65 years of age and you own a home, you can have from 32 thousand to 450 thousand Euros for the entire duration of your life.”
It’s just one example of advertising deals circulating recently on the pages of the newspapers and throws the formula for funding reserved to over 65 calls Annuities Mortgage Loan.
Also known as “reverse mortgage” or “equity release”, has long been known in northern Europe and arrives in Italy through legislative decree 203/05, supplementing the 2006 budget.
The loan is a lifetime mortgage funding long-term assisted by mortgage of First Instance, which is the first mortgage placed on real estate.
It is restricted to persons owning the house in which they reside, who are taking a sum ranging from 20 to 50% of the value of the house, in relation to the applicant. Generally, less than 70 years can receive 20%, above the 90 to 50%.
All costs relating to construction will be deducted from the financing, excluding the village survey carried out by an independent expert.
We must not make any payment until the debt is directly involved in life. There are no repayment installments: the interest and charges accruing on the financing are capitalized annually and must be paid by the heirs in a single solution to the final deadline, after the death of the borrower. The debt must be repaid within 12 months after the disappearance the loan (or spouse’s most long in case of a pair of elderly), or if the house is sold. The heirs could repay the debt in three ways:
* pagandolo (a rate and with more interest)
* selling the house
* renouncing inheritance.
After a year, if the debt is not repaid, the bank offers the property and recovers the credit.
The loan is for life’s unique financial instrument that provides for the calculation of interest on interest. In practice, the debt is “capitalized” each year. It’s called anatocismo. In Italy it is forbidden, but with one exception: the lifetime mortgage loan.
The site contains some Business Online data of 2007 and makes some examples and considerations on some solutions offered by banks:
There are 8.5 million families with over 65 years of owning a property (only 717,782 are in Latium), worth 900 billion Euros. For banks and financial get their hands on this property represents an excellent deal, but so also is the holder of the loan and for his heirs? If the pensioner requests a loan of 100 thousand Euros, an interest rate of 8%, after a year the figure is to be returned to 108mila euro. Later, however, interest is not calculated on the initial capital, but on the debt. So, after 5 years, the figure raises to 146mila Euros in 10 years 215mila euro, after 15 years we already 317mila euro: more than three times the initial capital.
What is more, the financing, which does not provide the consent of the heirs, is proposed as a response to the “holes” of the Italian pension system: “Your pension is not enough?” Cries the advertisement of the company Euvis, which proposes to mortgage the house and have a decent survival.
But the reality is different: “We noticed,” says a manager of IBL Bank, “that many seniors are asking the loan life even for the purpose of extraordinary condominium.
In Italy, the first bank loan for life was proposed in May 2007 by Monte dei Paschi di Siena, who entered in the various proposals for financing under the name PrestiSenior.
Then, you talk about another proposal for funding dedicated to pensioners: the assignment of the fifth of the pension.
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