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Tenhagen's financial tips: Partial sale: a lot of house, little money and plans for old age

2021-11-20T08:04:15.191Z


Many retirees have a house but little money to live on. In this situation, new providers lure with a partial sale. But that's not good. Why you'd rather take care of a new loan.


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The house as a pension (symbolic picture)

Photo: Gustafsson / Westend61 / IMAGO

It's actually a win-win situation: The joint hairdressing salon financed a beautiful, large house for the couple, everything has been paid off.

But otherwise there is not enough money for retirement to really enjoy old age.

Nothing easier than that. One should think.

If the house is paid off, the two of them simply take out a mortgage and can use the money to beautify their old age - and at the same time stay in their beloved house.

But in many places savings banks and banks do not offer their customers such as hairdressers such an offer.

Instead, the couple come across advertisements for the partial sale of their property while watching TV in the evening.

A baby boomer couple with a new classic car shines in it.

And off-screen it says: "Let your house pay for it - very happy".

New providers have read the signs of the times, are apparently better than the banks - and the newly retired baby boomers are enthusiastic about it.

So why are the banks so disinterested?

They are desperately looking for business models and investment opportunities for all the money that customers deposit with them.

What an opportunity for the savings banks and Volksbanks: They would have to pay less custody fees from their savers because they would invest in houses and pay a real estate pension to the less liquid homeowners in old age.

And indeed: every fifth person over 60 with real estate loans would be interested in such offers, according to a recent Forsa survey.

Well over half of the 18.5 million pensioners ultimately live in their own property.

Consumer advocates are also of the opinion that such a product would be useful. And something like this would also be easily possible in practice: For loans that are secured by a property and that should not be repaid during the contract period, the credit check could be omitted, the Ministry of Justice wrote to me this week. The lawyers call this real estate consumption loan. All in all, that sounds like a safe bet for the banks.

The reluctance of the banks is really difficult to understand.

They have already lost a lot of younger people because their products are not hip and digital enough.

And yet they also systematically drive the elderly out of the branches: first to the ATM in the anteroom, then to the machine that is built into the house wall while the customers are standing in the autumn rain.

That should be the core target group.

Partial sale confusing for pensioners

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Instead, shortly before eight, the commercials from sales companies that offer older property owners a partial purchase run.

It all sounds great, only a part is sold - and the owners can still stay in it.

What's the catch?

From the point of view of the provider there is none.

A lucrative business, thanks to a very generous fee model for the providers.

An investment banker recently ranted “cutthroat” impulsively about such models.

If you sell half of your house, you get paid out, but then you have to rent the other half back (usage fee) and continue to maintain the house on your own.

And if everything is sold at the end, there is often an "implementation fee" of a few tens of thousands of euros.

The provider is happy.

"Not recommended" because of the "unmanageable costs", judge my colleagues from "Finanztip".

The investment banker said he had sent his old neighbor to the house bank to take out a mortgage on the house and use the money to sweeten his old age.

Banks hardly to be seen

Real estate finance specialists like Mathias Breitkopf from Interhyp are also amazed at the reluctance of the banks.

Giving senior citizens an inexpensive loan on their property that has already been paid off would be »a desirable innovation.

Much better than the currently much advertised partial sales «.

After all: some Volksbank and Sparkasse already offer such financing in their region.

So it is all the more strange that it doesn’t make school.

In any case, Interhyp expert Breitkopf does not know of any nationwide mortgage lender who has already jumped on the bandwagon.

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Most institutes only offer normal building loans.

Above all, this means: You insist that not only is interest due on the loan, but that this loan is also repaid.

Of course, that doesn't make sense for retirees.

You want to consciously monetize part of the house.

The mortgage brokers of Dr.

Klein is surprised by this attitude of the banks: "Completely redemption-free loans are not part of the business models - even if a layperson might be surprised that the security of the property is not enough for the banks," says Björn Pätzold.

In addition to the security provided by the value of the property, it is always about the affordability of the loan installments that are then to be repaid.

When I asked the banking supervisory authority Bafin, it was not due to the legal framework.

Not making an offer here is a business policy decision of the banks.

Loans with repayment also do it in a pinch

So what to do

As a retiree, you have to be inventive.

The point is: there are banks, in Dr.

Klein and Interhyp, who are satisfied with a small repayment of one percent per year.

Even if that is so little that hardly any pensioner will experience the end of the repayment.

The good thing about it: The repayment can then be financed from the loan.

An example: If the senior citizen borrows 100,000 euros, has to repay one percent due to the affordability principle and pays 1.5 percent interest, annual installments of 2,500 euros - or a good 200 euros per month.

That's a lot of money for someone who needs to monetize their house.

On the one hand.

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On the other hand, the installments can easily be paid from the 100,000 euros.

It takes 20 years for half of the amount to be used up.

This is not addressed by bankers - and overlooked by customers.

They could take out a little more credit accordingly.

Interhyp says that eight percent of their 120,000 real estate loans brokered annually are taken out today to raise money.

Almost a third of these eight percent, i.e. around 3,000 loans, actually went to seniors for such models.

With 18.5 million retirees, well over half of whom live in their own four walls, that's not a lot.

Practical implementation

Practical now: You have a nice paid house and not enough money in everyday life.

Or they urgently need money for a new roof or heating.

  • Talk to your house bank. This should lend them the money for a nicer everyday life or the age-appropriate renovation. And make you a good offer for the 100,000 euro loan. Unfortunately, there are currently practically no loans without repayment. So you pay off a tiny bit, only 1 percent. And then after 15 years sell the house to move into a smaller apartment. Or their children take over the house and the loan. If the bank blocks, just read the following passage: In 2018, the federal government issued a regulation specifically that banks are also allowed to issue these loans in such a way thatif "the real estate value or the value of other assets of the borrower serving as collateral offers sufficient guarantee for the coverage of the liabilities in connection with the real estate consumer loan agreement and possible liquidation costs" (§4 Paragraph 3, Clause 2 Real Estate Credit Assessment Guidelines Ordinance - ImmoKWPLV) .

  • But you should definitely not just get a quote.

    After the house bank, you can go to Interhyp, Dr Klein or Planethome, for example, to obtain alternative offers.

    Two of the providers explained to me this week that the hundreds of banks and insurance companies they work with always include some that have low-interest, low-amortization offers.

  • If it is really not about a nice vacation, but about the age-appropriate renovation of the house, ask all providers about the special loans from the state KfW for such plans.

    Age-appropriate and ecological renovation are currently very popular.

  • As a cautious senior, however, you should also put some of the money aside for unexpected repairs, for example.

    You are still the sole owner.

    And at some point the heating breaks or the gutter breaks.

    Neither of these can be postponed.

  • Or you can sell the house completely from the start.

    Then you can run away with the money and make new plans for the new chapter in your life.

    Buy a condominium in the city, for example, next to a supermarket and hospital.

  • Or you sell completely and now, but stay in the house you sold.

    A contractually guaranteed lifelong right of residence then becomes part of the sales contract.

    The new owner has to look after the maintenance of the property and you can just live.

    The model is convenient, but significantly reduces the selling price of the property.

  • You can also combine your sale not only with a right of residence, but with a lifelong usufructuary right.

    Your advantage, this right will keep them as long as they live.

    So if you move to the nursing home, you are entitled to the rent from the rental of the house - and not to the new owner.

    The selling price is of course even lower.

    But then it is important who is responsible for maintaining the property in this constellation.

    From your point of view as a seller, such usufruct is a bet on your longevity.

Source: spiegel

All business articles on 2021-11-20

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