An annuity, or reverse mortgage, is a powerful monthly injection of cash for a pensioner or pensioner. This is not always a favorable solution. How does an annuity work? What are the pros and cons of a reverse mortgage?

Contents:

  1. What is an annuity for an apartment?
  2. How do I apply for a life annuity for a flat?
  3. Does the reverse mortgage pay off financially?
  4. Can you withdraw from the annuity contract?
  5. When is it worth opting for a reverse mortgage?
  6. What to do to conclude an annuity agreement?

Reverse mortgage , orlife annuity for an apartmenttempts many seniors. Reverse mortgage companies (annuities) often advertise on television and in newspapers aimed at older people. Often, leaflets with information about such a possibility are sent directly to mailboxes for people who may be potentially interested in it.

The offer seems very tempting: a few hundred, and sometimes even over a thousand zlotys and more per month is a considerable sum that can significantly repair a seniors' modest budget, allowing them to live a decent life despite receiving a relatively low pension.

What is an annuity for an apartment?

Simply put, a reverse mortgage is a fixed monthly income that a senior receives until death in exchange for transferring ownership of his property.

This is not a new idea. Reverse mortgage loans have been operating in many, not only European, countries for years. There, banks offer them, which monthly pay the client a certain amount of money in return for an entry in the mortgage in the land and mortgage register of a flat or house.

The real estate not only secures the reverse loan, but also becomes the property of the bank in the event of the owner's death - unless his heirs repay the senior's obligations by recovering the house or flat (they may also leave the premises to the bank, in some cases receiving a refund any surplus resulting from the difference between the value of the property and the sum of previously paid money).

In Poland it works a bit differently so far. It is true that in 2014 the Act on the Reverse Mortgage was passed, butbanks are not very interested in including it in their offers so far. This is for several reasons.

First of all, because signing such an agreement with the client is quite risky for the bank: it is not certain how long the money will have to be withdrawn and whether the amount of the payment by any chance - due to the customer's lifetime - will not exceed the value of the property covered by reverse credit.

That is why this service is offered in our country primarily by the so-called non-bank entities, i.e. private companies that offer their clients lifetime benefit contracts.

Mortgage funds offered by these companies are not - unlike bank loans - subject to any banking regulations. Most companies base their services on the institution of life imprisonment (in accordance with the Civil Code Art. 908-916), or on an annuity contract (Civil Code Art. 903-907).

How do I apply for a life annuity for a flat?

An annuity contract can be concluded by both single people and married couples. When one of the spouses dies, the benefit will continue to be paid (however, it is worth making sure that the contract does not contain a clause that allows this possibility only if both spouses were the owners of the premises).

There are several important requirements for the person or person wishing to apply for a reverse mortgage. First of all, reach the appropriate age - most companies offering this type of offer require a minimum age of 60, and even better 65.

Second, it must have the right to real estate: ownership or co-operative ownership (in the case of housing co-managed housing).

This does not mean, however, that he will receive such a mortgage: many companies accept only real estate in a specific location and with a specific size, such that it will be easy to earn later.

Also taken into account are apartments with already encumbered with a mortgage (whose owners took a mortgage), but such a situation is always considered individually.

Before signing a reverse mortgage contract, the company evaluates the property and assesses its legal status - only on this basis, it proposes the amount of the benefit, which, after signing the contract, will affect the account of the current owner. Therefore, it is not worth following simulations or using calculators available on the websites of such companies: they are only indicative.

The he alth condition of the potential mortgage fund client does not matter.

Does the reverse mortgage pay offfinancially?

According to companies that offer such services - yes, and sometimes even very much. The amount of the benefit paid every month may range from several hundred to even several thousand zlotys, and a part of the amount due can be collected once (in the form of a fairly large injection of cash).

Everything depends on the value of the property (and this, in turn, on its location, standard and size), as well as the gender and age of the person who decides to conclude the contract. Usually men who, according to GUS data, live shorter than women can count on higher benefits.

Analyzing the hypothetical amounts of payments with the help of calculators placed on the websites of companies offering housing annuities, however, you can find out that the promises of companies granting such loans are often not covered in reality.

For example, an owner of an apartment in Wrocław with an area of ​​about 80 square meters may receive about 700 per month for life (assuming that he is 66 years old and - according to GUS data on the average age in Poland, he will live up to 84 years). By comparing this sum with the actual value of the flat, it can be calculated that it is an amount not greater than 40%. the one that a senior would receive by selling his flat on the open market.

It is worth adding, however, that many companies also pay monthly fees, the cost of rent increases and city taxes, and also pay for property insurance.

Importantly, you do not have to pay tax to the tax office on the monthly benefits (if the property was acquired at least five years before the conclusion of the annuity contract).

The duty of the person who concluded the contract is to keep the property in good condition.

Can you withdraw from the annuity contract?

It depends on the company with which the contract has been signed. At the time of its conclusion, the existing owner of the property transfers the ownership right to the company in exchange for a certain amount of money, received every month.

Some companies in the contract contain a clause that it is not possible to resign from such a contract, while others allow it to be terminated at the customer's request, but it is worth remembering that there are certain consequences: in the event of termination of the contract, the customer must return all payments received so far and other costs incurred by the company (e.g. real estate insurance, rent, etc.), as well as interest on the money paid out.

When is it worth opting for a reverse mortgage?

Many people wonder if the annuity is a good solution. Unfortunately, there is no right answer to this question.It all depends on the individual situation.

Signing such a contract may be beneficial if the flat is a ball and chain - its maintenance costs money, and there is no one to leave it to in a will. That is why such offers are most often used by people who do not have relatives to whom they could leave their property, and at the same time a modest retirement does not allow them to live with dignity.

Before concluding an annuity contract, it is worth checking the opinions about the company carefully, and the contract itself should be consulted with a lawyer to make sure that it does not contain any legal loops enabling the company to take over the apartment.

What to do to conclude an annuity agreement?

A senior deciding to sign a reverse mortgage agreement should contact the helpline of the fund of his choice or complete an appropriate application on its website. After a few days, he will receive an initial offer and will be able to make an appointment with an advisor.

Then the appraiser will appear in the premises to evaluate the property, and the advisor will present the final proposal for the amount of the monthly installment.

However, it is worth giving yourself some time to sign a contract with a notary public, and it is worth going with your own lawyer to meet with an advisor, who will analyze the contract.

You also need to make sure that in the event of bankruptcy of the company, the apartment will return to its original owner (in order to do so, appropriate entries in the land and mortgage register are necessary), or whether it will be taken over by a bailiff as security for the assets of the mortgage fund.

Category:

Geriatrics