The senior credit buyout market is of growing interest to specialized institutions with mortgage and restructuring expertise, as well as specialized brokers attracted by the large commissions distributed.
It is true that the generation of the “grandpa boom” has been more recreational than the previous ones and many retirees have subscribed to a consumer loan (more than one in three households over 55) .
A sometimes complex situation
If seniors make more use of credit redemption organizations, it is often due to an economic situation inherited from the period in which they were active.
The loans taken out to finance the car, the purchase of a camper van, work on the main residence or the acquisition of a second home sometimes had a significant impact on the budget, even though the retirement coincided with a decline in purchasing power, sometimes leading to a situation of over-indebtedness .
This is even more penalizing when pensioners are forced to support relatives economically. The financial crisis and the poor employment situation often lead them to come financially to help children or grandchildren.
The strengths of retirees
French retirees are on average younger than their European counterparts. For comparison, it should be known that in 2020 seniors will represent 38% of the population in the United Kingdom against 32% in France.
Despite the slow erosion of the level of pensions (with regard to inflation), people over 60 are interested in banks. A good part of them is owner, which facilitates the repurchase of credit thanks to the installation of a mortgage guarantee.
In addition, seniors use the loan, even when they have savings, for example on life insurance contracts which, if they are not always liquid, can be pledged.
Banking products today adapt to senior citizens’ situations. In particular the borrower insurance that covers the risks of death and disability until the age of 85, enough to restructure its borrowing in the medium term. Their complexity, however, is enough to confuse a clientele that needs to feel safe to join a service.
It is strongly discouraged to opt for a proposal that is too sophisticated and to avoid mixed offers that aim to offer a savings formula in conjunction with the buyback transaction. On the other hand, it is imperative to leave on a fixed rate.
Other formulas adapted to seniors
While the problem of indebtedness can sometimes be crucial, there is no point in rushing to the first solution before having made an accurate analysis of the situation and before embarking on a path of credit redemption. With serious consequences, seniors have an interest in finding other solutions, such as the renegotiation of the current home loan, even if it means lengthening the duration.
It should also be checked whether another formula would not be more suitable, such as the Mortgage Loan Mortgage Loan which allows to obtain financing through the guarantee of a property and defer repayments until the death of borrowers .
This solution is more difficult to consider when there are heirs because the loan repaid in fine will be capitalized interest, which has the effect of significantly impact the value of the property.