The reverse mortgage is back. Strictly speaking, it never completely left, but now it is the big banks that bring it back to the front line after years of disappearing from the windows of the largest entities in the country. The date marked on the calendar is next November 20, when Banco Santander and Mapfre They will launch the pilot phase to market a renewed product that they have prepared for the last two years.
The reverse mortgage is focused on supplementing retirement income and is aimed at those people over 65 years of age who own a home. It is a financial instrument through which a loan is granted, estimated based on life expectancy, and a fixed amount is paid to the client in the form of monthly payments. The contracting party does not return anything while he is alive, and after his death, the heirs are responsible for returning the loan consumed and his interest.
In the case of the product that they have created in Mapfre and Santander, through a joint venture, the loan in question will only be granted on first homes and will have a fixed interest rate throughout the entire period of validity of 5.99% APR. The minimum value that the floor on which it is built must have. constitutes the mortgage will be 200,000 euros.
It can be hired in two modalities, with and without life annuity. In the first case, monthly payment of the installments is guaranteed until the death of the last of the holders, thanks to the fact that, together with the mortgage, a life annuity product is contracted with Mapfre Vida, the cost of which is included in the mortgage from the beggining. In this way, the client is assured of that monthly income until his death. In addition, the annuity premium is returned to the heirs in the event that the client dies before being able to enjoy it. In this case, the amount granted by Mapfre and Santander to the client could reach up to 70% of the appraised value of the property.
In the second modality, monthly payment of the installments is guaranteed until the client’s life expectancy. This means that, if the client exceeds that age, he stops receiving the monthly payments. This option reduces the debt on the property, but it would not cover the expenses that the owner may require after the completion of the income. For this option, the maximum amount granted could reach up to 50% of the value of the home.