Equity release mortgage in Málaga

We help you get your equity release mortgage in Málaga on the best terms. We filter the mortgage market and negotiate directly with each lender to secure you the best terms.

We arrange your Equity Release Mortgage

We arrange your equity release mortgage Free if you buy with us.

We take care of everything to save you time and money. We assign you a personal advisor who will be with you throughout the process and keep you informed at every step.

Request your free financial advice and we'll tell you all the steps and requirements for getting your equity release mortgage.

We'll advise you on the terms of your mortgage, repayments, term and everything you need for peace of mind. Our advice is completely free and focused on guiding our clients.

Steps to get an Equity Release Mortgage

Here are the steps our advisors follow to get you the best equity release mortgage:

• Financial advice: we build your profile to tell you the mortgage requirements and conditions.
• Submitting the mortgage: we submit your mortgage to different banks on your behalf according to your needs.
• Negotiating the terms: Once we have a response from all the banks, we negotiate directly with each one to lower the interest rate and secure you the best terms.
• Choose your mortgage: all the bank offers will be presented and explained to you so you can choose the mortgage you want.
• Valuation: we manage and accompany the valuer.
• Support at the notary: on the day of signing before the notary, your personal advisor will be with you, just as throughout the whole process.

Alternatives to an Equity Release Mortgage

Advantages and drawbacks of an equity release mortgage

Advantages

• Tax benefits: Amounts received through an equity release mortgage are not subject to income tax.
• You keep your home: You can carry on living in your current home as its owner.
• Value for your heirs: After the debt is repaid, any surplus goes to your heirs.

Drawbacks

 The amount of money you'll receive won't be very high, as explained above. In other words, you won't be able to live on what you're paid by the equity release mortgage.

 You'll find it hard to sell the home, as you can only do so if you can pay off the debt with the proceeds of the sale.

Your heirs may lose your home if they can't pay off the debt you've taken on with the equity release mortgage. Also, if the sale or repossession of the home doesn't cover the full debt, the lender may seize other assets from your estate.

Requirements to apply for an Equity Release Mortgage

As we've explained, you can only take out one of these products if you have a very particular profile. These are the requirements you must meet:

• Own a home. It can be a house or a flat, your main residence or a second home. In any case, it must be free of charges, that is, it can't be mortgaged. If you paid off your mortgage some time ago but haven't yet cancelled it at the Land Registry, we explain how to do this below.
• Be elderly, disabled or dependent. You'll qualify if you meet one of these requirements:
  • If you're 65 or over, although some lenders raise that age to 70.
  • If you're 65 or over and have a disability of 33% or more
  • If you have severe or major dependency. In this case, your age doesn't matter.

The lender granting the equity release mortgage won't mind what your income or financial solvency is, so it won't ask you to prove your income or provide guarantees. Bear in mind it expects to recover its money when you die, as we'll explain below.

What is an Equity Release Mortgage?

The Reverse Mortgage is a mortgage loan that allows over-65s to obtain, secured on their home, a monthly payment to supplement their income for a set period of time, with the option of receiving these payments for life.

After the death of all the holders, the heirs will have a period of time to repay the total amount owed, with the option of paying it off by selling the home or keeping the house and paying off the debt.

A equity release mortgage is a type of mortgage loan in which the bank pays the client a monthly income in exchange for the client offering their home as security. Put very simply, it works the opposite way to a normal mortgage.

In general, this equity release mortgage is aimed particularly at clients over 65 (although depending on the bank the age may be 70) who already own a home. In exchange for mortgaging their home, the holder will receive a monthly income that may be temporary, for life or a single lump sum, depending on what they've taken out.

In the case of the temporary equity release mortgage you'll receive a monthly payment for the period set in the contract. The total amount received with this equity release mortgage will be equivalent to the home's value, so this type provides a higher monthly payment than the lifetime one, as it has a limited duration. However, once the home's value has been covered, the payments stop. With this type of equity release mortgage the income is not subject to income tax. 

The lifetime equity release mortgage , on the other hand, guarantees a monthly income for the mortgage holder's whole life. As there's no end date, the monthly income received is lower than with a temporary equity release mortgage. This type of loan may also include a lifetime annuity insurance that kicks in when the income received by the holder exceeds the maximum value of the mortgage.

If you take out a lump-sum equity release mortgage you'll receive a single payment based on the home's valuation at the start of the mortgage.

It's important to note that once the home's value has been used up through the monthly payments you wouldn't lose the use of it. There can also be more than one holder on the equity release mortgage, so where it's for life or the agreed term hasn't ended, it only falls due when both holders have died.

As for repaying the mortgage loan, this falls to the heirs, who must decide whether to sell the property and pay the rest of the debt, pay the debt with their own funds or, if they can't, take out a new mortgage to pay the outstanding debt.

An equity release mortgage, as its Spanish name (reverse mortgage) suggests, works the opposite way to a normal mortgage. In other words, instead of borrowing money to buy a house, you mortgage your home so that a lender pays you money for a period of time. These products are aimed exclusively at over-65s or dependent people who want an "extra" income to top up their pension.

Depending on how long the money is paid, equity release mortgages can be of two types:

• Simple equity release mortgage: here, the client and the lender agree the period during which the lender will pay the client. When that period ends, usually after 15 to 20 years, the client stops receiving payments.
• Equity release mortgage with deferred lifetime annuity insurance: here, the client receives payments until they die. However, the amount of those payments will be lower, as they're paid for longer.

How does an Equity Release Mortgage work?

Whereas with a traditional mortgage you, as the client, receive the full loan amount from the bank and make monthly payments to repay the debt, with an equity release mortgage you're guaranteed a monthly payment that you won't have to repay during your lifetime. After your death, your heirs will have to repay the loan and its interest.

The monthly amounts received through the equity release mortgage, up to the set term, are not subject to Personal Income Tax (IRPF).

This monthly income can also supplement other income you may be receiving such as your pension or other funds, and the loan can be repaid early if you wish.

WHO CAN APPLY FOR AN EQUITY RELEASE MORTGAGE

• People over 65.
• Home owners.
• With no other mortgages or charges on the property.

Other important factors in getting an Equity Release Mortgage

If you meet the requirements set out above, you can submit your application to a lender that grants equity release mortgages. First, it will give you a Pre-Contractual Information Sheet (FIPRE) showing the general terms it usually offers to those applying for these products. It will also advise you, answering your questions about these mortgages and explaining their pros and cons.

If you're interested in its terms, you'll need to provide a copy of your ID (which shows your age) or the documents certifying your disability or dependency, plus the nota simple for your home to prove it's yours. You'll also need to commission a valuation of your house from a valuer approved by the Bank of Spain and give it to the lender, which needs to know the home's value to work out how much it will pay you.

The lender will send these documents to its underwriting department, which will study your application. If approved, you'll be given the binding offer with the final terms. If you agree with them, all that's left is to sign the equity release mortgage before a notary. If you don't fully agree, improving the terms will be very difficult, as lenders aren't usually open to negotiation. Even so, you lose nothing by trying.

Once the equity release mortgage is signed, your home will be officially mortgaged and the lender will pay you the amount you've agreed, either as a lump sum or as monthly income or payments. Bear in mind that it won't be a lot of money, as usually only 20% to 30% of the home is mortgaged (up to 60% in exceptional cases).

Here's an example so you can see roughly how much you could receive. Say you mortgage 22.50% of a 250,000-euro house. In this case, you could receive 56,250 euros as a lump sum or monthly payments of 135 euros until you die.

When you die (or all the holders of the equity release mortgage die, if there's more than one), the debt will pass to your heirs. In other words, your heirs will have to repay the lender everything it has paid you plus the interest accrued up to your death (interest is usually around 5% a year).

This is what your heirs can do if they accept the inheritance:

• Keep the home, in which case they'll have to pay off the debt with the bank. They can do it in one go if they have enough money, or take out a new mortgage on the property to refinance the debt.
• Sell the house and pay off the debt with the proceeds of the sale.
• Not pay off the debt. In this case, the lender will repossess the home and auction it to recover the money. This repossession will also happen if you have no known heirs or they all reject the inheritance. If the auction doesn't raise enough to pay off the debt, the lender may also seize part of your estate until it's fully settled.

• What is an Equity Release Mortgage?

  The Reverse Mortgage is a mortgage loan that allows retired people over 65 to obtain, secured on their home, a monthly payment to supplement their income for a set period of time, with the option of receiving these payments for life.

The Reverse Mortgage is a mortgage loan that allows retired people over 65 to obtain, secured on their home, a monthly payment to supplement their income for a set period of time, with the option of receiving these payments for life.

• Keys to getting an Equity Release Mortgage

  What matters is that you know your strengths and weaknesses in the eyes of the banks and negotiate with every lender to find the best mortgage. Remember that a bad mortgage can turn a home purchase into a failure, which is why it's important not to settle for the first mortgage you're offered.

  Shop around the banks and negotiate every mortgage term hard to secure the best interest rate.

What matters is that you know your strengths and weaknesses in the eyes of the banks and negotiate with every lender to find the best mortgage. Remember that a bad mortgage can turn a home purchase into a failure, which is why it's important not to settle for the first mortgage you're offered.

Shop around the banks and negotiate every mortgage term hard to secure the best interest rate.

• What are the alternatives to an equity release mortgage?

  There are other options similar to an equity release mortgage that let you raise money from your home, but they all involve selling it. As the home will no longer be yours, your heirs won't be able to inherit it. So they aren't advisable if you want to leave your home to them.

  They are:

  • Home pension or property lifetime annuity: you sell the home to an insurer, which lets you carry on using the property and pays you a higher income than an equity release mortgage until you die (it pays more because the house is already its own and there's no risk of your heirs failing to pay).
  • Insured lifetime annuity: similar to the above, although with this product you can sell both property and other assets such as shares or investment funds, up to a maximum of 240,000 euros.
  • Bare ownership: you sell your property in exchange for being able to keep living in it as a life tenant until you die (a set term can also be agreed). The buyer pays you a lump sum instead of instalments.
  • Sale with guaranteed rental: this also involves selling the home, but in this case you become a tenant. Of the sale proceeds, you can keep part and the rest goes into a rental fund used to pay the rent (if that fund runs out, you won't have to keep paying).

There are other options similar to an equity release mortgage that let you raise money from your home, but they all involve selling it. As the home will no longer be yours, your heirs won't be able to inherit it. So they aren't advisable if you want to leave your home to them.

They are:

• Home pension or property lifetime annuity: you sell the home to an insurer, which lets you carry on using the property and pays you a higher income than an equity release mortgage until you die (it pays more because the house is already its own and there's no risk of your heirs failing to pay).
• Insured lifetime annuity: similar to the above, although with this product you can sell both property and other assets such as shares or investment funds, up to a maximum of 240,000 euros.
• Bare ownership: you sell your property in exchange for being able to keep living in it as a life tenant until you die (a set term can also be agreed). The buyer pays you a lump sum instead of instalments.
• Sale with guaranteed rental: this also involves selling the home, but in this case you become a tenant. Of the sale proceeds, you can keep part and the rest goes into a rental fund used to pay the rent (if that fund runs out, you won't have to keep paying).