If the traditional mortgage, which is to get a loan to buy a home is low hours, called reverse mortgage has gained momentum. The demand for these loans grew 17% from January to April 2011 in connection with the same period last year, with 19,900 applications, according to the consultancy Optimal Aging. But why should this increase and what is really?

Aimed at age 65 years or dependents, the reverse mortgage can be a possible solution to the lack of income for retirees, whose pensions in Spain are 40% more than the European average, according to data compiled by the consultant. This financial product can transform real estate assets into cash.

This is a real estate secured loan installment to receive the money that would result from the sale of housing, with the particular property is maintained and can continue to use the property or even rent it. Thus, the owner receives a monthly income until his death, at which time the heirs take over the credit institution or the security forfeited.

Currently, Unimm, Ibercaja and BBK are some organizations that offer this financial product, but not all the banks that sold the promoting.

The amount you receive each month is determined by three factors: First, the age so that older, more money, since the entity expected to have to pay money for less time. Your profile is ideal for people over 75 years. Second, sex. Women with a longer life expectancy, charge less. Third and finally, the value of the property. The higher the price of the property, the greater the amount to be received.

Calculated some examples to see how much money would be received based on the value of the property. A 70 year old man with a house valued at 300,000 euros would take 550 euros a month. In case of women, the amount is reduced to 480 euros. If the age is 80 years, the rent would amount to 1030 euros. Housing for 400,000 euros and an owner of 70 years, the monthly payment would be 733 euros.

Costs and interest

The monthly rent for a period usually lasts between 10 and 20 years, but can be lifelong. Yes, the contract involves a series of costs, as well as a regular mortgage, the entity shall include in the outstanding amount of the refund. Typically the fee, the management costs (taxes, notary, registration agency and the entity below) and interest on the loan. in the current market range between 5.30% and 7%.

In the case of income not limited, it is necessary to hire a deferred annuity insurance, with which the entity is shielded in case the customer exceeds the expected life expectancy by the insurer. The operation can be undone at any time and, moreover, is exempt from taxation.