The lifetime mortgage loan is a fairly recent form of financing that is reserved exclusively for property owners who are already 60 years old. By applying for this particular type of loan, you will have the opportunity to receive a sum of money for which you will find yourself having to pay practically nothing. No installment, no interest, and this for life. How can this be possible?
Well, the annuity mortgage loan is a loan that is obtained through a mortgage on the property. By taking out the mortgage, you will get a certain amount of money on loan; the sum will then be returned by the heirs who can avail themselves of various reimbursement variants.
The lifetime mortgage loan is therefore a long-term loan that does not provide for any kind of payment or repayment of the sum or interest at least until the contractor’s death. It is therefore a loan based on the possession of a building, on which a mortgage must then be stipulated that will guarantee the loan. But what is a lifetime loan? Who can request it and what are the requirements? How do you get this particular type of early? And again, who should I contact to get it? Let’s examine these aspects one by one.
What is the life loan?
The lifetime mortgage loan is a long-term loan without installments, intended for people who are at least 60 years old and who own a property.
The life loan is born in Great Britain where it is proposed for the first time in 1999 with the name Lifetime Mortgage . Introduced subsequently also in Italy and in other European countries and not, the mortgage loan has spread very soon all over the world. In Italy it was introduced for the first time in 2005 and since then it has been recognized as an excellent type of financing especially for elderly people who own property.
The mortgage life loan provides as we have already anticipated the mortgage on the property that will be the subject of the loan . However, this is a long-term loan that does not provide for either installments or reimbursement, at least during the life of the contractor. In fact, since it is a loan of this kind, the borrower will practically have to pay nothing for the rest of his life. After signing the contract, you can take advantage of the amount received as you see fit and wish.
Regarding the repayment of this particular type of loan, it will be borne by the heirs of the contractor. In fact, within 10 months of the death of the contractor , the heirs or his substitutes will be required to reimburse the financial institution that provided the loan. They can do this by choosing the reimbursement method they prefer from the various options available to them.
How to get a lifetime mortgage loan
But what is the procedure for applying for a lifetime mortgage loan? First of all, you will need to make sure that this type of loan is the best option available to you. If you are at least 60 years old, you own a property and you need liquidity, the annuity mortgage loan could be the best solution for you.
First you should determine what the amount the bank could offer you for the property you own could be. By establishing in advance the amount you could receive, you will realize if this type of loan is really suitable for you and can satisfy your need for liquidity. Remember that the bank could offer you a percentage on the property that ranges from 10% to 50% of its value .
Once you have determined the amount you could receive, identify the banks or lenders where you can apply for a lifetime loan . When considering the various credit institutions you could contact, consider the interest rate that will be applied, the substitute tax and the loan repayment terms that will be borne by the heirs. Ask for more quotes and carefully examine the offers that will be offered to you. In this way you will be able to find the best and most suitable offer for your needs.
Once you have decided which bank you want to go to, you will be ready to apply for a lifetime mortgage loan. The presentation of the application usually takes place at the bank or the bank you have chosen. Together with the application you will have to present a complete documentation.
Documents to be submitted along with the application
Along with the question, you will have to gather all the necessary documentation so that the bank can carefully assess your situation and decide whether or not to grant you the financing. The documents to be presented are:
- Copy of the identity document
- Fiscal Code
- Contextual certificate
- Family status
- Preliminary Notary Report or Certificate of Origin
In addition to the documents I have listed here, the bank may ask you for additional documentation to carry out further investigations. Once the application has been submitted along with all the required documentation, the bank will express its feasibility opinion, perform a property appraisal. Once these two phases have been overcome, you will be presented with the actual contract which defines the conditions between the bank or the credit institution and the loan holder. After signing the contract and registering the mortgage on the property, the bank will provide the loan holder with the amount agreed in the contract.
Requirements for loan application
Obviously, before applying for a lifetime mortgage loan, you should first make sure that you meet the requirements for this particular type of loan. The main requirements for obtaining a lifetime mortgage loan are:
- Age from 60 years upwards
- Owning a residential property
- Do not have a mortgage on the property in question
The minimum age to apply for the loan is therefore 60 years, as regards an age limit for applying for this loan, there is none. The banks do not set age limits to apply for an annuity loan, rather the more the age of the applicant is advanced, the higher the sum offered on loan.
Furthermore, the loan can only be requested if you own a residential property. Therefore, you will not be able to request this loan if you own non-residential buildings and properties, buildings built in areas of high seismic risk, properties that have geographical, artistic and other constraints, and properties built on areas granted by municipalities.
The last indispensable requirement is not having already stipulated a mortgage on the property in your possession. This is precisely because the mortgage loan provides for the stipulation of a mortgage on the building, a mortgage which will then be a guarantee for obtaining the loan.
We have already established that the sum obtainable with this type of loan is very variable. The amount depends both on the age of the contractor and on the value of the property that will be the subject of the mortgage . The value of the property will be established by an expert sent by the bank; while as far as the age of the contractor is concerned, the greater the age and the higher the percentage granted by the bank for the loan. In fact, it is precisely the older subjects who can request the highest percentage that corresponds to around 50% of the value of the property.
Indicatively the percentages obtainable will be those shown in the table that we propose below. Obviously the percentages can also vary based on the bank or the bank you choose.
We are now going to examine the methods of repayment of the mortgage life loan and the various options that the heirs of the contractor will have available. The main point to establish is that the lifetime mortgage loan is a loan that does not provide for any kind of repayment during the life of the policyholder. Those who contract this type of loan agree to obtain a sum in exchange for the stipulation of a mortgage on the property owned by them. The loan will be repaid approximately 10 months after the death of the contractor and will be borne by the heirs.
After the death of the contractor, the heirs will acquire the property together with the stipulated debt. At that point they will have 10 to 12 months to pay off the debt and repay the full amount of the loan to the credit institution that granted it. The heirs can choose between two different repayment options:
- Pay off the accumulated debt while retaining ownership of the property
In this case the heirs, if in possession of sufficient liquidity, will be able to reimburse the bank or the credit institution totally extinguishing the debt. If they do not have sufficient liquidity, they may decide to eventually take out a loan that allows them to pay off the debt.
- Allow the bank to sell the property to cover the debt
In this case the heirs will renounce possession of the property and will let the bank continue with the sale to cover the contracted debt. If the property is sold at a sum greater than the amount owed by the heirs to the bank, the latter will repay the sum in excess to the heirs.
Advantages and disadvantages of the annuity loan
After having examined in detail the elements that characterize the life-long mortgage loan and having understood the requisites required to obtain it and the methods of request, let us analyze the advantages and disadvantages of this type of loan.
The first advantage to be taken into account is certainly the possibility of obtaining a sum of cash without having to repay it quickly with the addition of interest. In fact, this type of loan is long term, so the contractor will not have to repay it during his life. He will only obtain the agreed sum, using it as he sees fit, and then the debt incurred will fall on the heirs. This is certainly a practical way to get a sum of money, especially in case of need, without having to worry about having to pay it back in a short time.
On the other hand, however, this type of loan also has disadvantages that you should take into account before deciding to request it. First of all, the amount you will be able to obtain will be limited , in fact the sum subject of the loan is very variable; it depends both on the age of the contractor and on the actual value of the property on which the mortgage will be stipulated.
It must also be taken into account that in the end the heirs will find themselves having to repay to the credit institution also the interest accrued on the loan. Furthermore, the building on which a mortgage will be stipulated, will be subject to constraints , for example it cannot be rented or restructured and also cannot be used as a guarantee. These are elements that you should definitely consider, and before deciding to apply for a lifetime mortgage loan.
Where to apply for an annuity loan
Which credit institutions offer the possibility of applying for this type of loan? First of all, let us point out that, for the moment, Poste Italiane does not provide for the stipulation of life-long mortgage loans. It is possible to request other types of loans but not of this type.
As for other credit institutions to apply for a lifetime mortgage loan, you have various options to consider. Some are listed here:
- PrestiSenior of Monte dei Paschi di Siena
- Annuity Loan of Intesa Sanpaolo
- Unicredit Home Value
- Mortgage Life Loan of Banca Popolare di Sondrio
These lenders offer the possibility of applying for a lifetime mortgage loan. Obviously the characteristics of the loans and the methods of requesting and repaying vary from bank to bank. It will be up to you to examine the various loan proposals and establish the one that is closest to your needs.
The lifetime mortgage loan is a special type of long-term loan dedicated to the over sixty owners of a property. If you are over 60, you own a residential property and find yourself in need of a certain amount of money, this loan could be the ideal solution for you.
The mortgage life loan consists of the stipulation of a mortgage on a property; the mortgage guarantees the loan. The sum you can get is equal to a percentage ranging from € 10 to € 50 of the actual value of the property. The most interesting feature of this loan is that the contractor will not have to repay it during the remainder of his life. The repayment of the debt together with the interest will take place 10 to 12 months after the death of the contractor and will be borne by the heirs.
You can apply for this loan from various credit institutions, choosing the option that seems best suited to your needs.