After several years of waiting, finally the law of reverse mortgage has been accepted. Reverse mortgage is a product novelty on the Polish market, it has to enable the holders of flat equity release its frozen. The property owner will receive money in exchange for that, after his death, the bank will take over the apartment, unless the heirs decide to redeem them.
During the work, the assumptions of the Act repeatedly underwent modifications in the meantime was, inter alia, idea to combine this with the regulation of pension mortgage, or a similar solution prepared by the company’s product called mortgage funds, ultimately they are to be covered by the person by law. The bill adopted by parliament that the payment of money under the reverse mortgage can be a one-off or in installments, the number of installments and the amount will be specified in the contract. This means that – unlike the annuity mortgage – payment of installments of the reverse mortgage may be terminated before the death of the borrower, which put him in a sticky financial situation.
Reverse mortgage also for young
the reverse mortgage agreement may be concluded either by a single person, as well as marriage. In the latter situation, the death of a spouse, the money will be paid on. During the term of the agreement the borrower must keep living in deteriorated condition, and (if the bank requests it, or rather it will be) to insure it from acts of God. Remember to timely pay taxes.
It is interesting that, although the reverse mortgage product will be reserved for seniors, this law does not specify a minimum age of people who can use it. Says only that the borrower may be a natural person who owns the property or is entitled to its cooperative property ownership or perpetual usufruct. Thus, banks, constructing the offer, will be able to decide what they want to solicit for customers. It should, however, ask whether the banks will at all interested in offering this type of product. The Act imposes on them a lot of responsibilities and limitations and may be that there are not many takers.
12 months to repay the apartment
A year after the death of the last borrower the amount of the payment is due, so either the heirs will have to repay the loan, or the bank can take the house, which was secured loan. You should know that if the property owner (or his heirs) sell it or its value drops significantly due to the fault of the borrower, the bank will be entitled to satisfy its claims from other assets, not only of the mortgaged property.
There is concern that if there is a relatively quick death of the borrower, the bank will take over the apartment for next to nothing. After the death of the bank customer will be required to measure the property and pay the heirs of a difference. Banks are here to make money on the interest, and not seizing the property for a fraction of the market value.
The law on reverse mortgage will now go to the Senate, which has 30 days to take the appropriate resolution. Then the document lands on the desk of President, who on her signature or rejection is 21 days. Then the document will be published in the Official Gazette and after 30 days of this event, enters into force. Please also note that banks will probably need some time to prepare tenders (reverse mortgage is a first for them), so it is difficult to expect that customers can take advantage of the reverse mortgage earlier than at the turn of the year.
Marcin Krasoń
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