Understanding how a mortgage life loan works

The mortgage life loan is a financing formula for any owner (natural person) of real estate property that does not have sufficient resources or whose state of health does not allow it to access the loan. This type of credit makes it possible to place one’s property in order to receive the necessary funds for the realization of a personal project such as the acquisition of a vehicle, the renovation of a roof or the financing of a trip. These funds are paid to the borrower in the form of capital or annuity. He remains the owner of his property and wants to be free to live there or to rent it to third parties. The amount collected is refunded to the financial institution that granted the credit when the latter is responsible for selling the property.

Operation

The mortgage life loan must be signed with a notary. The loan offer must obligatorily mention:

  • The identity of the parties
  • The date, the nature of the credit and the conditions for making the funds available
  • The designation of the mortgaged property and its value
  • The periodic schedule (in case of installment payment of the sum borrowed)
  • The total cost of the loan and the overall effective rate
  • The cooling off period of the credit offer, which is at least 10 days from receipt

Good to know : until the loan offer is accepted, no payment of funds can be made by the lender to the borrower.

Property estimate and fees

property loan

The property placed in guarantee of the loan must be estimated. The choice of the expert results from an agreement between the parties. Expert fees are the responsibility of the borrower. The notary must ensure the consistency of expertise with the real estate market. Indeed, the value of the housing placed in mortgage determines the debtor’s borrowing capacity.

Amount of credit

credit loan

At the time of the conclusion of the contract, the bank determines the maximum amount that can be granted according to 3 criteria:

  • The value of the appraised property
  • The age of the borrower
  • The sex of the borrower