Report
Upon retirement, “good customers” are surprised to suddenly pass for bad payers in the eyes of their bank.
Depending on their financial situation and the degree of amortization of their mortgage, retired clients are suggested to sell their house or apartment.
Amortization required
If, as a rule, a mortgage loan is granted for residential real estate in the amount of 75 – 80% of the value of the object for active customers under 55 years of age.
This percentage will drop drastically to around 50% / 60% at the time of retirement!
The rule applied as a general rule for the charges/interest ratio is that the cost of the mortgage calculated on the basis of an average rate of 6.5% must not exceed one third of the income.
It is easy to understand in view of the above that a good part of Seniors risk finding themselves in very unpleasant situations in the near future, this phenomenon being further accentuated by a reduction in LPP pensions and an additional reduction for those who have used part of their LPP capital for home ownership.
According to the analyses, only 40% of property owners will be able to meet the criteria for bank financing when they no longer have a gainful activity , 40% will have to take saving measures and 20% will find themselves in a difficult situation. bearable.
Real estate strategy for retirement
1 – Invest in mortgages, pay off?
The mortgage is not necessarily a charge. The mortgage loan is an investment alternative that can reassure in this period of negative interest rates.
This opportunity is possible, but has a tax cost, especially since our tax system for private rental values does not help matters and it is more or less heavily felt depending on the Canton.
2 – Saving in the third pillar and/or possible redemption in LPP?
In this way we save taxes and we will have more money at retirement in order to adapt housing or reduce mortgages.
No longer possible to save for retirement, what measures can be considered?
- Passing on your house to the children while retaining a right of habitation or usufruct.
That the children (if their income is sufficient) are joint and several co-debtors for the mortgage loan.
- and if the collateral rate allows it, create a “bank rent ”. The mortgage is increased, part of this credit can be used to immediately pay the interest of the next 10 to 15 years on the basis of a fixed rate and the rest to improve its income. Banks are rather hesitant on the subject.
- As a long-term solution , and if the collateral rate allows it, create a life annuity “life annuity, with or without reimbursement ”. The mortgage is increased, the credit is used to finance an immediate life annuity which allows the cost/interest ratio to be reduced and income to be improved. The annuity is pledged to the pledgee. It is clear that this solution will reduce the capital to be passed on to the heirs.
- Sale in life
- The principle is simple: people of a certain age or retired sell their house at a price below market value.
- In exchange, he lives there until their death without paying rent and, sometimes, even receiving an additional pension.
- He also receives capital at the conclusion (the bouquet) allowing immediate liquidity.
- The potential buyer will, therefore, consider the possible gain, i.e. the market value of the property minus the capital required at the time of the sale (the bouquet). But also, and this is the most delicate, the amount of the possible annuity to be multiplied by the number of months until the potential death of the seller.
In summary:
For future Seniors (of which we are all part) who are already owners, it is necessary to anticipate, analyze and implement exit strategies as quickly as possible.
It is clear that the third and fourth ages are not really suited to direct real estate investments and that for this category of investors it is better to turn to indirect real estate investment which exists in different forms.
By remaining at your disposal to discuss it.
