In Spain, reverse mortgages are targetted towards the 65 years plus market of retired property owners who own their homes outright but who perhaps find it difficult to make ends meet. The Spanish reverse mortgage enables people in this age bracket to receive money each month (or a one off payment) from a bank or lender whilst carrying on residing in their home for the rest of their life.

Spanish reverse mortgages have become increasingly popular over the last couple of years and are expected to become even more so when a new Spanish law comes into action later in the year. As of now only a handful of the larger Spanish banks and building societies offer a reverse mortgage scheme but according to a survey carried out by El País, it seems that a large segment (almost 25%) of the 55 to 80 year old population in Spain are interested in this particular financial arrangement. By all accounts, approximatley 10,000 reverse mortgages have been taken out since this type of scheme was launched in Spain around five years ago.

What Are The Benefits of Reverse Mortgages?

Spanish reverse mortgages give people the guarantee that their family (or whoever inherits their property) may repay the mortgage to the bank (as well as any interest or other money owed) in order to take ownership of the property from the bank. If they do not wish to pay the mortgage back, the bank will give them the remaining sum of the mortage that the bank had not paid out to the owner.

The reverse mortgage is different from another similar type of deal whereby owners of a property sign ownership of their property over to a Spanish bank or lender while the lender then guarantees to pay them a sum of money for the rest of their life. This type of product though results in the lender owning the property when the owner dies, regardless of the amount of money they had paid out to the owner while they were alive. This type of arrangement also does not give any beneficiary the opportunity to purchase the property back for a fair price.