The reverse mortgage is getting closer
On December 15 a new mortgage product may appear on the Polish market. On this day, the provisions of the Reverse Mortgage Act will come into force.
From that day, new loan offers may appear in the banks’ offers. So much theory, because in practice, or at least a large number of offers, we will have to wait several months.
Thanks to the reverse mortgage
Some people will theoretically be able to count on increasing their income. This loan consists in obtaining from the bank, usually monthly benefits, in exchange for the bank taking over the property after the borrower’s death. It is worth emphasizing that the funds will be paid only for the period specified in the contract.
Therefore, the payment may cease before the borrower’s death, which may put him in a bad financial situation later in the event of a decrease in income. The Act also allows the payment of benefits once, or the breakdown of the payment into periods other than one month.
Reverse loan collateral can be any property belonging to the borrower, including an undeveloped plot of land. The loan agreement can be concluded by a single person, but also by a married couple. In the event of the death of one of the spouses, the funds received from the bank will continue to be paid out. During the entire period of residence in the property, borrowers must take care of its technical condition, as well as incur all fees, e.g. rents, insurance and taxes.
The provisions of the Act do not introduce a limit on the age of the borrower, therefore, theoretically, not only senior citizens but also relatively young people will be able to apply for such a loan.
Due to the high importance of the reverse mortgage agreement, the regulations impose additional rights and obligations. The borrower will have to receive a special information form from the bank at least 7 days before signing the contract. This will allow you to carefully read the terms of the loan and consult its provisions with a lawyer or loved ones.
In addition, even after signing the loan agreement, it will be possible to withdraw from it within 30 days, which significantly expands the rights that are currently enshrined in the Consumer Credit Act. In the case of other loans, it is possible to withdraw within 14 days based on these regulations.
What after death?
In the event of the death of the last borrower, heirs will be able to repay the debt within 12 months and thus keep their property. In the absence of repayment, the bank will take over the property and proceed with the sale procedure.
For this purpose, a real estate appraisal will be required. After selling the apartment, the bank will have to transfer any surplus to the heirs.