Reverse mortgage

In the credit market, in recent years a new tool has emerged - a "reverse mortgage", a program that can give retired people, aged people the opportunity to improve the conditions in which they live, at the expense of their existing real estate.

Under the reverse mortgage agreement, collateral is property held by a potential borrower in the property. Having evaluated it, the bank offers a loan for the maximum possible amount for itself. Later, a mortgage apartment can sell and pay off a loan. It is not excluded that the bank will not be able to repay the loan in this way in full, in this case the state comes to the aid - it pays for the difference. In addition to the sale of collateral real estate, there are other conditions for the return of such a loan.

The reverse mortgage is especially relevant when the salary or pension is too small, or when the borrower has no children.

Consumer lending is intended, rather, to meet the needs of the able-bodied population. As for loans for pensioners, then especially rely on the fact that credit organizations will give them, perhaps, not worth it. Not to mention that it is more than difficult to return "borrowed" funds to bank interest rates.

But according to the "reverse" program, the pensioner has even a choice: either to get a large amount immediately on hand, or to receive them monthly (a good increase to a pension turns out ).

The bank issues money as one of the participants of this scheme, but does not receive money, so it is called the reverse one. The reverse mortgage has a fundamental difference from the classical one - it does not require maintenance, since the interest accrued for the use of funds is automatically added to the amount of debt.

It is noteworthy that by participating in this program, the owner continues to live in his own apartment. In general, borrowers are protected from seizure of the apartment in case of default until:

• At least one of the relatives of pensioners, permanently registered in the apartment, is alive;
• The borrower carries out various payments for real estate, including taxes and insurance.

I must say that when receiving monthly payments on a loan, a pensioner practically receives the most if not the full value of the mortgaged property. This means that after the apartment is sold, the inherited property will decrease at times or disappear altogether.

Probably, to someone the reverse mortgage reminds lifetime rent. But do not jump to conclusions. With a life annuity, the elderly person hands over to another organization or person the rights to their property in exchange for material and physical assistance. Such a contract means a lifetime payment of funds also in the interests of the person who has undertaken these duties. And it's not for nothing that the old people are afraid that the contract concluded with them may be interested in the quick departure from the life of their "wards".

Under the scheme of the reverse mortgage, the bank, on the contrary, is interested in the longest possible life of the borrower: with the accrual of interest, the amount of debt increases. You can not exclude the fact that the borrower himself or one of his relatives, having returned the loan, will restore their rights to the apartment.

This scheme, most likely, can be more in demand in the circle of absolutely single pensioners who have small apartments. In other cases, there are also alternative options for obtaining additional income, for example:

• Exchange for an apartment with a smaller area,
• Renting your apartment at the same time as renting another apartment that has a smaller area,
• Help from relatives, future heirs, etc.

For the state, this is an advantageous mortgage, as it shifts its obligations to ensure the standard of living of pensioners to commercial structures, which they carry out, however, against the apartment earned by a pensioner.