Regardless of age, knowing how the reverse mortgage works is very important. Do not wait until you are over 62 to study the possibility of converting the capital that represents a property into money or a monthly income.
The reverse mortgage is a relatively new mechanism in Mexico and was established as a kind of pension. It was instituted in 2017.
To exercise it, interested persons may require the establishment of a trust in their favor in which the accrediting financial entity will act as a trustee, a financial institution other than the creditor as a trustee and the Secretariat of Social Development of Mexico City as a trustee.
There is a difference between the mortgage loan and the reverse mortgage and there is no need to return the money while staying at home. However, there are other points that must be taken into account.
What aspects influence the way in which the reverse mortgage works ?
There are 3 factors that are taken into account for the reverse mortgage:
- Age: Those people with retirement age who do not have a pension but who own a house can have a monthly salary.
- Available options: This person over 62 years of age can opt for a life pension or a fixed-term pension (for example, 15 years),
- The heirs can choose to pay the loan once the property owner dies.
Through the reverse mortgage contract
The financial entity is obliged to pay, in a single exhibition or periodically, the amount of credit granted to the elderly person or his beneficiary who must be his spouse, concubine or concubinary of equal age or over 60 years, according to the document.
In other words, you can have a monthly income while you live. And if you opt for a pension you can stay in the house after that time due to the provisions of the law on foreclosure only in case of death.
The law that came into force to regulate this type of mortgage states that the house will be executed only when the owner dies.
What will happen to the heirs?
The law also provides for the lender to consult the heirs if they want the conservation of the estate and if so they must pay the loan.
Depending on how the reverse mortgage works, it could be said that for the homeowner it solves the problem of lack of pension, although for his heirs it may mean the contraction of a debt.