Once the mortgage loan is purchased, there are two ways for the property owner to receive their funds:
- A total payment of the capital at one time;
- Either a payment in the form of a monthly, quarterly, etc.
Note that the borrower has nothing to repay and it is not necessary to provide this loan. He can then use the funds as he sees fit for his personal projects.
The lending financial institution reimburses itself only for the resale of the real estate upon the death of the owner.
Life Mortgage Loan Term
The life of the mortgage loan is variable, it depends first of all on the health of the owner. Indeed, it is at his death that the contract ends and the lender repays itself by selling the property.
The mortgage life loan can also be shortened if the owner sells his property himself or if he decides to make a partial or total prepayment.
Repayment of Mortgage Life Loan
The operation of the mortgage life loan allows early repayments, whether for the entire capital or only part of it.
Be careful however, the lender is entitled to refuse refunds representing less than 10% of the paid-up capital.
For this, it is sufficient to inform the lending organization by registered mail with acknowledgment of receipt. The repayment can also be made by the sale of the mortgaged property, sometimes with an expertise by the lending financial institution if it is not satisfied with the amount of the offer to purchase.
The total amount of the mortgage life loan
The maximum amount of the mortgage life loan is subject to three specific criteria:
- The value of the property;
- The age of the borrower;
- The sex of the borrower.
Traditionally, the amount of the mortgage life loan is limited to a portion of the total value of the property, generally between 15 and 75% according to the criteria mentioned above.
Note that to agree on a mortgage life loan, the property given as security must first be estimated by an expert chosen in agreement by both parties. The expert’s fees are then borne by the borrower. Following this, a notary will judge the consistency of this expertise.
The mortgage life loan contract
The mortgage life loan contract must specify:
- The identity of the parties and the date of the loan;
- The designation of the mortgaged property and its value;
- The conditions for making capital available;
- The total cost of credit and its overall effective rate;
- The payment schedule, if necessary.