Mortgage Life Mortgage Term Factors
The term of the mortgage life loan depends on several important factors.
Basically, this type of credit does not have a real term, the contract ending when the borrower or the last borrower dies in the event of multiple borrowing.
However, the term of the mortgage life loan can be reduced by several elements:
- A transfer for a full or partial prepayment of the mortgage life loan;
- The sale of the real estate put in guarantee by the owner himself. In this specific case, the bank recovers its capital and has the authorization to contest the sale if it judges the amount of the property underestimated.
Mortgage Life Loan Amount Factors
The amount of the mortgage life loan also varies according to various criteria defined by the Consumer Code and the lending bank. In general, the total amount of the mortgage life loan depends on:
- The real value of the property to put in guarantee after expertise;
- The age of the owner of the property to put in warranty;
- Sex of the owner of the property to put in guarantee.
Early repayment to reduce the life of the mortgage loan
Early repayment , partial or total, reduces the life of the mortgage loan, but can be a bad financial transaction.
Indeed, it entails penalties that depend on when it intervenes in time:
- Four months of interest or five monthly payments before the fifth year;
- Two months of interest or three monthly payments between the fifth and ninth years;
- One month’s interest or two monthly payments after the tenth year.
Decrease mortgage loan amount
The amount/duration ratio of the mortgage life loan can be attractive under certain conditions. For that, it is important to calculate the real interest rate of the loan, which will make it possible to know the amount of the penalties in case of prepayment, for example.
In fact, the longer the life of the mortgage loan, the more interesting it will be for the borrower.
Note that keeping this loan to completion may be interesting for the heirs. Indeed, they have two options: repay the loan to keep the property or refuse the estate and let the bank sell the property. In the latter case, if the proceeds of the sale are greater than the initial capital, the surplus goes to the heirs, while in the opposite situation, it is the bank that makes the difference in his charge.