Property owners in old age: Wealthy and poor at the same time

The savings are tied up in their own home

Approximately two million German homeowners over the age of 65 have less than €1,000 available per month. While they live in their own homes, their pensions and savings are barely enough to live on. Furthermore, they often face significant expenses. Their house or apartment may be aging and require maintenance or renovations to make it more accessible for their needs.

Wealthy yet poor – this applies to a growing number of seniors who own their own homes. But moving out of their familiar surroundings is unthinkable for most. "Therefore, tailored solutions for elderly homeowners are needed, solutions that take their needs into account," says Prof. Dr. Schradin from the University of Cologne.

One way for homeowners to access the equity tied up in their property without having to move out is through a reverse mortgage. "We buy the apartments or houses of seniors and pay them a lifelong annuity. They also receive a rent-free right to live in their familiar home, legally secured in the land register – until the end of their lives," explains Friedrich Thiele, CEO of Deutsche Leibrenten AG, the market leader in reverse mortgages. The annuity payments are also secured by a real encumbrance registered in the land register. This offer is available to both single individuals and couples.

"A reverse mortgage allows you to access tied-up capital. Such models have long been commonplace abroad," says economics professor Schradin. Compared to other loans, such as reverse mortgages, the reverse mortgage stands out due to its simple and transparent structure. Furthermore, there are no loan interest, fees, or commissions like those charged by banks and insurance companies.

The calculation of the annuity amount takes into account the property value, the age and gender of the owners, and the costs of maintaining the house. Only after in-depth consultations and an external, independent appraisal are prospective buyers presented with a binding offer.

The life annuity is generally suitable for all property owners aged 70 and over and is also recommended by the Federal Association Initiative 50plus.