You may come across the term reverse mortgage on the internet. While with a conventional mortgage you take out a loan to buy your own property and gradually repay the amount borrowed in regular monthly instalments, with a reverse mortgage you usually get a one-off loan against the mortgage of your own property. A reverse mortgage is also sometimes referred to as a reverse mortgage, upside down mortgage or senior mortgage.
Who is the reverse mortgage for?
Non-bank financial companies arranging reverse mortgages (note: none of the Czech banks offer reverse mortgages) target mainly older lonely people. The minimum entry age for arranging a reverse mortgage is usually 60 years. The senior pledges his/her property to a non-banking company (note: a lifetime easement is also agreed), and continues to use and care for it.
The loan is repaid after the death of the property owner
In the case of a reverse mortgage, no monthly payments are made and the entire amount owed, including interest, is repaid upon the death of the property owner. The non-banking company will use the proceeds from the sale of the property to satisfy its claim. If the proceeds of the sale exceed the non-banking company’s claim, the remaining amount goes to any heirs.