Mortgage loan reform

 

The Senate Finance and Treasury Commission has amended the regulations governing the life-long mortgage loan . This is a form of financing reserved for those over 60 years of age and who own property. The rationale behind the provision is to allow pensioners who are short of cash or who need it in view of an important expense to enjoy an alternative financing instrument, offering a mortgage as a guarantee in their turn on a property they own. 

It is clearly a measure that takes into account a part of the particular economic situation triggered by the ongoing crisis, which does not show a willingness to give way to the recovery, and on the other of the credit crunch underway, which forces the strata of population most at risk to seek alternative instruments. Considering the often insufficient level of pensions in our country, it was therefore decided to introduce and regulate in the most appropriate manner the life-long mortgage loan.

A response to the crisis and the credit crunch

A response to the crisis and the credit crunch

The new legislation was approved by the Finance and Treasury Commission of the Senate , and establishes that elderly people over the age of 60 who have ownership of a property can put it to guarantee a loan to the selected credit institution or financial intermediary. All without losing the property and continuing to enjoy the property, a fundamental difference with respect to the institution of bare ownership, another alternative form of financing often used by the elderly.

Once the mortgage is turned on, which puts the bank in the shelter of any surprises, the heirs will in turn have the possibility of recovering the full ownership of the property, in turn extinguishing the credit claimed by the institution , agreeing on a repayment plan with which are reimbursed for expenses and interest, so as not to have to pay them at the same time as the natural maturity of the loan. At the same time remaining the possibility, for those who can do it. to extinguish the financing in a single solution.

The new legislation

The new legislation

Introduced with the law 248 of 2005, the new life-long mortgage loan provides for some substantial modifications. Now the elderly over 60 can take advantage of it . Those who offer a non-residential property or place in a seismic zone cannot request it.

In this regard, it should be remembered that the annuity mortgage loan was introduced in Italy with the law 248 of 2005 . The main difference with the first regulation was that concerning age, since before the remodeling this form of financing was reserved for citizens who had reached 65 years of age. In Anglo-Saxon countries, this institution is known as reverse mortgage or equity release and provides for the granting of a loan commensurate with the age of the applicant: the more advanced the age, the more it can be requested. Usually, it fluctuates between 20 and 50% of the market value of the property and its disbursement excludes the possibility that it may be non-residential or located within seismic areas. Furthermore, anyone who obtains the loan cannot sell, unless he extinguishes the mortgage, or rent the property as a guarantee. If the loan is not fully reimbursed by the applicant or his heirs within twelve months for certain events such as death, the new legislation provides that the bank that provided the loan may sell the house at a value at least equal to the market value , to then use the proceeds of the sale in order to extinguish his credit.

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