In Italy, there are few savers who know about the life loan , a form of financing dedicated to the over-65s that allows obtaining high amounts for any need, offering a home as a guarantee. Let’s find out how this type of mortgage loan works and how you can get it.
How the annuity loan works
The life loan is granted against a mortgage on the house: in other words, a part of the value of the property is transformed into liquidity. For this reason, it must be stipulated before a notary who guarantees the legitimacy of the contract. The bank delivers the requested amount in a single payment to the customer, who maintains ownership of the house and will not have to repay any installment. The repayment of the loan takes place only after the disappearance of the borrower.
The heirs will have 10 months time to decide the method of repayment, which will have to be done in a single solution: they will therefore be able to sell the house to repay the debt and keep the difference for themselves, or repay the debt with their own means, extinguishing the mortgage on the house.
This loan is reserved for those over 65, with no maximum age limit. The amount payable increases with the age of the applicant.
The life loan, when compared with other products dedicated to the over 65s, has some advantages:
– allows to obtain high amounts (much greater than, for example, a fifth assignment);
– can be reimbursed at any time (in this case, however, an early repayment penalty is provided);
– does not provide for any installment for the life of the borrower;
– the house remains the property of the borrower, unlike what happens with the sale of bare ownership;
– does not provide for age limits.
Of course, there are also several negative aspects related to this financing, which should be taken into consideration before the stipulation:
– the house of residence is mortgaged: at the time of repayment, in the event that the heirs are unable to meet the debt, they will necessarily have to sell the house;
– interest accumulates over time and is capitalized annually: this loan in fact provides for compound interest, which means that the interest earned on the loan in turn produces other interests;
– at the death of the borrower, the loan must be repaid in a single payment.
The history of the life loan
Lifetime loan is a very common form of credit abroad, especially in England and the United States, where it developed over twenty years ago. In Italy the life loan was introduced with the law n. 248 of 2005 , but remains a product little known to the public and offered only by a few financial institutions. Currently 65Plus, a company specializing in senior citizens, is recognized on the market as a reference specialist in the Italian annuity loan market: 65 Plus offers does not directly provide Josiah Bounderby annuities, but offers its services to banks and financial institutions that want to offer this loan to their clientele.