Just like the personal loan, the senior mortgage is a consumer credit. It differs from other types of personal credit by its guarantee: this type of loan is, in fact, secured by mortgaged property belonging to the borrower. How exactly does the senior mortgage work and what category of people does he or she go to?
The principle of mortgage lending
In 2006, the Mortgage Life Loan was launched by Crédit Foncier de France to allow the use of its real estate property in another way. This type of loan guarantees the housing of the borrower and offers him a credit paid in cash, in exchange for a credit calculated according to the value of the property. Repayment of the credit made without death insurance occurs only when the borrower dies or when the property is sold.
As a result, the borrower remains the owner of his property until his death and does not make any refund during his lifetime. The bank therefore only receives the repayments and its interest on the death of the borrower, the repayment being made from the selling price of the house.
If the heirs of the dwelling choose to keep the house, they will be responsible for repaying the entire loan with interest to the bank. However, the mortgage life loan is a loan that is repaid expensive, with an interest rate of 7.50%. Its main advantages lie in the fact that it only pays off when the borrower dies and at the same time allows the borrower to use a pool of credits.
Senior Mortgage Loan: Who Can Benefit?
The mortgage life loan, which is a personal loan, is only intended for a natural person.
It can not therefore be obtained to finance professional projects and can not be granted to an association or a legal person. If this type of loan does not require any condition of age, level of income or state of health, banks that offer this kind of credit usually offer it to seniors aged 65 and over.
Seniors who benefit from this type of loan can thus obtain a varied amount between 30 to 60% of the value of their property.
Types of operation that can be funded by the pensioned mortgage
As a personal loan, the pensioned mortgage is intended to finance only the personal projects of the borrower. The borrower can use this type of loan to finance the studies of his grandchildren, to undertake maintenance work on his home or to pay for a home help service.
Some seniors use this loan to pay for retirement home services. There are also those who choose to take out a mortgage life loan to pay for their medical expenses and to ensure that they can still receive medical care.
Some conditions for the senior mortgage
Certain conditions must be met to obtain a mortgage life loan. The loan must first and foremost be made without death insurance. The bank often requires a first mortgage on housing, to guarantee repayment of the loan.
In addition, the immovable property that is the subject of a mortgage must only be used for residential purposes, such as a principal residence or a second home.
By fulfilling these conditions, there is no reason for a senior to be denied a mortgage life loan, especially since this loan does not require any condition on the borrower’s health status.