Mapfre and Santander will encourage the Reverse Mortgage market

It has recently been announced that Santander and Mapfre will begin the commercialization of the reverse mortgage through a joint company created by both companies.

This will mean that we will be able to see many advertising campaigns in the media to advertise a very interesting product to complement retirement income.

According to a study in the report Mortgage ignorance in Spain, 54% of Spaniards do not know what a reverse mortgage is. And in this percentage of the population there is a large majority of its possible users: those over 65 years of age.

In Spain, very few Reverse Mortgages are formalized

Given this general lack of knowledge, it is important to know in detail this product, which has great development in other countries, although in Spain not many operations have been formalized so far. According to the Notarial Registry, during the year 2022, 787 reverse mortgages were signed; three times more than in the previous year.

The reverse mortgage is a financial instrument through which a loan is granted, referring to the life expectancy of the applicants, and a fixed amount is paid to the client in the form of monthly payments.

You can also request the payment of an initial amount to settle possible previous debts (other mortgages, personal loans, etc.), and complement that payment with a monthly income.

A product for People over 65 years of age with Habitual Home Ownership

This product is focused on supplementing retirement income and is aimed at those people over 65 years of age who own a home and wish to use the savings accumulated in it without having to leave their home or lose the property.

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 its interest.

Steps to formalize a Reverse Mortgage

En MAS VIDA We have an agreement with CASER for the processing of this type of products with very advantageous conditions. What are the steps for formalization?

1. We meet with the interested party to learn about their preferences and specific needs.
2. We consult different wealth liquidation products and present several reverse mortgage proposals.
3. The official appraisal is carried out through an independent appraiser approved by the Bank of Spain and the National Securities Market Commission.
4. A binding offer (final proposal) is issued by the entity.
5. A mandatory procedure is carried out by which a independent consultant certifies that the operation enjoys all guarantees under the law. This is done to prevent fraud and protect user rights.
6. The operation is formalized before a notary and the amount of the reverse mortgage is received.

Very few Formalization Expenses

The user will only have to bear the costs of the official appraisal prior to granting the reverse mortgage and the costs of the independent advisor. The rest of the associated expenses will be included in the amount of the loan itself (opening commission, notary, property registry, etc.).

The user can repay the loan in life if they wish or after their death.

In the latter case, the heirs will be responsible for liquidating the accumulated debt within a period of 12 months following the death of the last of the owners. This debt will be equal to the sum of the provisions plus interest.

In all options, MAS VIDA provides support and advice to heirs so that they can carry out their wishes under the best conditions.

Other products to Complement Retirement with more Liquidity

The truth is that the loan that can be obtained for this product, although this always depends on the age of the applicants, is usually around 30% of the value of the property, so in many cases it is a figure that does not sufficiently satisfy the needs of the users.

There are other products that may be more interesting to complement pension income: The sale of the bare property, which provides income above 50% of the value of the property on average; or the sale and leaseback, whereby whoever sells the home obtains a considerable amount for it and can continue living in it for life paying a rent well below the market price.

So, now that the Mapfre and Santander reverse mortgage is going to make this product known, keep in mind there are Other optionsand request information to find the best alternatives to complement your pension.