In recent years, financial institutions regularly develop new loan programs designed for elderly people. Therefore, it is not surprising that a mortgage has become available to some pensioners. The banks that offer it, for safety reasons, require co-borrowers or guarantors to be involved in the transaction.
Mortgage for seniors - is it real?
Despite the fact that not every bank will agree to such a loan, it is still possible. In the view of credit department employees, the ideal borrower is a fifty-five year old woman who works or a sixty year old man who continues to work. In some cases, there is a need to increase the period for which a mortgage is issued. Banks making such concessions have the right to require the client to present papers confirming the income of the potential co-borrower. Therefore, pensioners who receive a large pension and have additional income have a real chance of obtaining a loan.
Do banks give a loan to purchase an apartment for non-working pensioners?
Many financial institutions only issue mortgages to older people who continue to work after retirement. At the same time, banks do not consider pension payments as income. But, unlike such institutions, a mortgage is issued to pensioners in Sberbank regardless of whether they continue to work or not. In such cases, managers develop individual loan programs that maximize the possibilities and needs of the potential borrower. At the same time, each working and non-working pensioner undergoes a thorough check.
What are the requirements for a potential borrower?
Despite the fact that it is becoming easier for a pensioner to get a mortgage every year, banks present a number of requirements for a potential client. A non-working candidate for borrowers must submit a document confirming the actual size of the pension. Sureties or co-borrowers of such a pensioner must also bring a statement of income to the banks. All borrowers and possible risks are subject to compulsory insurance. In fact, the age of the person to whom a mortgage for pensioners can be issued varies from 65-80 years. But the deadline for paying the last installment must coincide with the eightieth anniversary of the borrower. Therefore, the bank should apply for a loan for the purchase of an apartment no later than 75 years of age.
Among other things, an elderly candidate for borrowers is required to present a certificate to the bank confirming the fact of passing a medical examination at the clinic. Those who went on early retirement (ballerinas, law enforcement officers and military personnel), the loan term can be extended to 25 years. One of the key requirements for a potential borrower is compulsory life insurance. This is necessary in order for insurers to be able to cover the rest of the debt without attracting guarantors. No bank will agree to give a pensioner a mortgage without insurance and guarantors. In some cases, it is much easier to get a loan to buy an apartment for one of the able-bodied and younger relatives, even if a pensioner will actually pay it.
How to get a loan to buy a home without paying a down payment?
Such a mortgage for pensioners, the conditions of which bring reality closer to becoming the owner of the desired square meters, is becoming increasingly popular. One of the mandatory requirements in this case is the availability of collateral property, which can be purchased property. In most cases, a mortgage for pensioners without an initial payment is provided at higher interest rates. As a rule, the difference is not more than 5% per annum. It all depends on the degree of risk of a banking institution. When applying for such a loan, not only the interest rate increases, but also the amount of a one-time contribution for concluding a transaction. If usually it is about 3% of the loan size, then when applying for a mortgage without a down payment, this figure increases to 8%.
Despite not too profitable conditions, mortgage for retirees without making a down payment is becoming increasingly popular. This is due to the fact that in large cities the growth in the cost of one square of housing significantly outstrips the increase in the chances of the population to accumulate the amount necessary for the first installment. It should also be noted that the interest rate varies depending on the type of housing. So, the percentage accrued for the use of a loan for the purchase of a country house will differ from that which is established when buying an apartment in a new building.
What documents are needed to get a mortgage?
The package of documentation needed to apply for a home loan includes such papers as:
- original and photocopy of the internal passport of the potential borrower;
- application form completed on a form provided by a banking institution;
- certificate issued by the state pension fund.
In addition to all of the above, a pensioner is required to present documents of guarantors or co-borrowers. At the same time, seller’s documents are of no small importance. The package of his papers should include not only documents for an apartment and an identity card, but also a bank account number.
The procedure for obtaining a mortgage
After collecting all the necessary documents and writing the appropriate application, the potential borrower waits until the bank checks all the papers and makes a decision. In the case of pensioners, banking institutions more carefully study the documents, credit history and reliability of guarantors. Most often, a mortgage is provided to military pensioners, since the size of their monthly allowance allows them to service a loan without any problems even in the absence of additional sources of income.
What is a reverse mortgage for single pensioners?
An elderly person who has entered into such an agreement receives a predetermined amount each month. After his death, his apartment becomes the property of the bank. This substantial increase in pension provides an elderly person with a dignified and comfortable life.
In other words, a reverse mortgage is nothing more than a legal procedure, during which an elderly person lays his home in a reliable financial institution that is committed to providing a pensioner for the rest of his life. It should be understood that by agreeing to such an agreement, the bank is at great risk. After all, there is always the likelihood of litigation with the relatives of the pensioner.
Varieties of Reverse Mortgages
Today, there are several different forms of such lending. The most popular are the following types of mortgages:
- a lump-sum payment on a mortgage is used in cases where the client needs money for an expensive urgent operation;
- payment in equal installments over a predetermined period: most often, such an agreement is signed for 10 years, during which the client will receive small amounts;
- a mortgage with a change of residence, providing for the payment of the difference in the cost of apartments.
The amount paid on the reverse mortgage is calculated taking into account numerous factors. After all, no one has yet canceled the risks associated with improper housing valuation or inappropriate spending.
