FinanceInsuranceMortgagePropertiesPrestito Vitalizio Ipotecario (Reverse Mortgage): what it is, how it works, and what the benefits are

27 July 20230
Introduction

The Prestito Vitalizio Ipotecario, also known as reverse mortgage, is a financial instrument that has been gaining popularity in recent years in Italy as well. It is a loan that allows homeowners to convert the value of their property into cash, without having to sell or give up home ownership.

The lifetime loan is aimed primarily at over-60 homeowners, who can obtain a sum of money to be repaid only upon death or transfer of ownership. This allows them to supplement their income in old age while still retaining the right to live in their home.

So let’s look in more detail at what the lifetime mortgage loan consists of, how it works, and what benefits it can offer.

 

What is the Prestito Vitalizio Ipotecario

The Prestito Vitalizio Ipotecario is a loan that allows you to obtain cash using the value of the property you own as collateral. Unlike regular mortgage loans, it does not involve monthly repayment of installments but full repayment in one lump sum at the end of the term.

This term coincides, in most cases, with the death of the borrower or the transfer of ownership of the property. Until then, the person who obtains the life loan can continue to live in the house and does not have to worry about paying installments or interest.

Life loans are usually granted from the age of 60, and the amount depends on the value of the property, which is estimated at the time of application. On average, up to 50 percent of the value of the house can be financed.

 

How it works

Let’s look in more detail at how an annuity mortgage loan works.

The owner of the property, who must be at least 60 years old, applies for the lifetime loan at a lending institution or finance company. An appraisal of the house is conducted by an appraiser to estimate its market value. Based on the value of the property, the maximum amount that can be disbursed with the lifetime loan is determined.

Once the amount is agreed upon, the owner receives the money in the form of an initial disbursement or monthly annuity. From this point on, he no longer has to worry about repaying the loan, which is extinguished upon his death or when the property is sold or transferred.

The heirs can either pay off the outstanding debt by paying the amount stipulated at the time of contracting, or they can repay it by selling the property and retaining the excess portion of the debt. Alternatively, if they want to keep the house, they can repay the inherited loan in full.

The bank or financial institution then recovers the loan granted when the property is sold, retaining the amounts lent and paying any surplus to the heirs. In the meantime, the beneficiary of the life loan does not have to worry about repaying anything and can enjoy a supplement to his or her income.

 

The advantages of the Prestito Vitalizio Ipotecario

The Prestito Vitalizio Ipotecario has several advantages, particularly for over-60 homeowners.

– Income Supplementation. The money obtained with the life loan can significantly increase the monthly income of retirees or elderly people with modest incomes. Care expenses or medical treatment can be more comfortably met.

– No installments to repay. There are no installments, interest or principal to pay each month. Seniors do not have to worry about incurring new costs but can benefit from increased income.

– No risk of foreclosure. The home remains the property of the person obtaining the life loan and therefore cannot be foreclosed. This avoids the risk of foreclosure that could occur in the event of nonpayment of installments on a traditional mortgage loan.

– Permanence in the property. The owner can continue to live in his home and is not obliged to move elsewhere.

– Immediate liquidity. The time to obtain the money is relatively short, without lengthy and laborious approval procedures.

– No assets. The life loan does not affect the estate or succession of heirs, since it is repaid from the proceeds of the sale of the house.

– Affordable costs. The costs for file education and interest on the loan are quite low.

 

Conclusion

The Prestito Vitalizio Ipotecario is therefore a viable solution for the elderly who wish to supplement their income without giving up the right to live in their own home. It allows a portion of the value of the property to be converted into cash, generating additional financial assets.

At relatively low cost and interest, this financial instrument offers important advantages for the mental and physical well-being of the over-60s. It enables them to face the expenses and difficulties of old age with greater serenity, while also avoiding the risk of delinquency in mortgage and loan payments

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