You’ve probably heard about reverse mortgages one time or another but never really stopped to think what they are or if you could be interested in one. Tecnotramit delves into this subject in today’s post as we know it is becoming an evermore common concept in the current property context.
A reverse mortgage is a financial product for older customers who own property and wish to transform part of the accrued value into regular income. It is a good way of earning a fixed income to supplement any government pays. Below is a small summary of the key concepts and requirements to apply for a reverse mortgage.
Reverse mortgages are standardised in Spain by Act 41/2007, 7th December, which modifies Act 2/1981, 25th March, regarding the Regulation of the Mortgage Market and other rules concerning the mortgage and financial systems. Please see details about some general requirements to apply for a reverse mortgage in Spain:
– The applicant must be at least 65 years or older, although in special cases it may be granted to people who are 60.
– The applicant must own their usual place of residence and its value must be enough to support a reverse mortgage. An appraisal on the property is an important step in the process.
– The property must be free of mortgage charges or must be very low so it can be cancelled with money from the reverse mortgage.
– Even though regular income is not a prerequisite, the financial institution will check if the applicant has the means to pay for costs associated with the property, such as maintenance and taxes.
– Before signing the reverse mortgage, the applicant must receive independent and free advice from a company or specialised professional not tied to the financial institution that issues the mortgage.
– If the property is in joint ownership by a married couple, both spouses must authorise said reverse mortgage. Furthermore, the applicant has the right to withdraw and cancel the reverse mortgage within 14 business days from the contact signature.
Therefore, having taken all of the above into account, it is crucial anybody interested in a reverse mortgage seeks out financial and legal advice beforehand, since these products can be complex and translate into long-term implications for your finances and assets.