At the time of retirement, doubts and questions arise, such as whether it is possible complete income that will be obtained from then on in order not to lose purchasing power. One of the options available to workers who have already retired is to apply for a reverse mortgage.
Although this concept may not sound familiar to many, one reverse mortgage It is a type of mortgage loan in which the bank can pay a sum in a single payment or a monthly rent to the client in exchange for this offer your home as collateral. For it to be granted, a series of conditions must be met. In addition, as the Organization of Consumers and Users (OCU) points out, it must be taken into account if it is really interesting.
The main premise from which it starts is to provide liquidity to users during their retirement from home ownership. The OCU has surveyed more than 2,000 residents in Spain over 55 years of age to find out their income forecasts and financial needs, while the reverse mortgage offers available in the market and their legal regulations have been reviewed.
The pension, the only income for many retirees
The data is clear: the retirement pension represents the main and almost sole income for a large majority of Spaniards (52%). The average pension of those surveyed is 1,070 euros.
55% receive less than 1,000 euros of pension. Only one in four exceeds 1,500 euros. At least 30% of retirees need a income supplement. In fact, 37% of Spaniards aged 55 or over describe the financial situation of their home as difficult or very difficult, and 14% have to ask for financial help to meet certain payments.
Disadvantages of reverse mortgages
However, faced with this situation, reverse mortgages only constitute a viable alternative for some cases, since the conditions offered generally do not meet the needs of the users.
As found in the average price of housing in Spain, the amounts offered by these financial products are insufficient. In addition, the interest rates applicable to the reverse mortgage are double those applied by banks to mortgages to buy a house.
On the other hand, some of the banking entities only offer the reverse mortgage when the owner is over 70 years old. Not to mention that, in the current situation, this financial product only provides sufficient liquidity to those who own a property of great value.
For all these reasons, the OCU experts consider that currently the reverse mortgage is not an instrument that can solve the problem in which many retirees find themselves, except in isolated cases. For it to be so, I would have to increase supply and significantly reduce both expenses and, above all, the interest rate differential with respect to mortgages to purchase a home.
Finally, they also advise involve the heirs in this matter before contracting the mortgage loan, since in many cases it will help to find better solutions for all parties.
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