The reverse mortgage, your future in the new mortgage law

The reverse mortgage is a new financial product, a credit for over 65 years, most home owners who want to convert the value of your property on a monthly income for life.

Approved by the Cabinet on March 2, the draft law governing the concept of reverse mortgage obtained its approval by the Senate Finance Committee this week to be submitted to Congress.

One of the innovations in its passage through the Senate has been to extend the type of housing that could benefit from this form of credit, since so far only applicable to this mortgage residence.

According to the text, the reverse mortgage is a loan or credit secured by a mortgage on real property constituting the residence of the applicant and provided they meet several conditions. As discussed above, are also included in this definition are non-standard housing.

The requirements for the person concerned are:

• Have 65 or more years or be suffering from severe dependence.

• The debtor will have the amount of the loan by regular rules.

• The debt is only callable by the creditor.

• The property must be valued and insured against damage.

The loan will depend on two factors: the age of the applicant and the appraised value of the house. Moreover, this will not change property when the owner dies.

Then, the heirs, in turn, may, if so stipulated in the contract, cancel the loan and pay the entity the outstanding debt with their interests, to tackle the credit they have left their families to stay with the house negotiate with the bank for another type of refinancing the property or to execute the claim and recover the remaining amount on the appraised price, if they have negotiated an annuity.

Currently, financial institutions that offer this mortgage options differ, depending on maturity, whether limited or lifetime. The latter involves a monthly charge less but with the advantage that the beneficiary will continue until the holder of the mortgage alive. Some are Caja Vital, BBVA, La Caixa, BBK, Caja Duero or Ibercaja.

Finally, reverse mortgages, as set out in the text, are exempted from payment of transfer taxes and documented legal acts, not only in the constitution but, in subrogation, renewal and cancellation. Similarly, the notary and registration costs will be reduced compared to its original position. It is used called "Documents without value" and known for "registration", in the case of registration fees.