More financial freedom with a fixed-term annuity for your property

In times of rising prices, money is becoming tight for many. For many seniors, for example, their pension barely covers their living expenses. A reverse mortgage is a good way to gain more financial freedom. One variation of a reverse mortgage is a fixed-term annuity.

In short, a reverse mortgage is the option of selling your property and still continuing to live in it. This works by the property seller securing a right of residence for themselves. The reasons for using a reverse mortgage are varied: greater financial freedom in everyday life, settling inheritance matters while still alive, funds for accessibility modifications, or debt repayment.

The temporary pension

Selling real estate with a time-limited annuity works as follows: When you sell your property, you have a right of residence registered in the land register. This right of residence can be for life or for a limited period. Since a right of residence represents an encumbrance on the property, it affects the sale price. Depending on its duration, it reduces the price. An experienced real estate agent can explain exactly how this affects the sale price.

A fixed-term annuity is called a fixed-term annuity because, upon sale, the period during which the annuity is paid for the property is agreed upon. Typically, the buyer makes a larger lump sum payment, and the remainder is paid as a monthly annuity. The seller and buyer can agree relatively freely on the distribution of the lump sum and the annuity. An alternative to a fixed-term annuity is a lifetime annuity. With this model, the annuity is paid for life.

Calculation of the time-based pension

The basis for calculating the annuity is the property's value. A local professional real estate agent will determine this value precisely. The value of the rent-free right of residence is then deducted from the determined property value. The calculation of this right of residence is based on a complex formula that takes into account either the duration of the right of residence or the age of those to whom it is granted. Therefore, such a calculation is always individualized. Consult a local professional real estate agent for advice.

Which type of annuity is right for me?

It all depends on your individual needs. What do you hope to achieve with this greater financial freedom? Do you want to fulfill personal wishes, pay off debts, or settle an inheritance? Do you also want to spend your entire retirement in the property, or are you looking for age-appropriate housing? An experienced real estate agent can help you find the right solution for you.

Would you like to know if a reverse mortgage can help you achieve greater financial freedom? Contact us! We'd be happy to advise you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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