“Giving credit to the elderly”.
This is the motto with which the lifelong loan process has been carried forward, from the halls of parliament to the branches of the banks which have now begun to offer this new solution to their over 60 customers.
But let's proceed in order and try to explain what it is about, the history and developments.
The origins
The life loan was born in Italy in 2005, without however having great development, also due to still limited and incomplete legislation. For this reason, the law and the implementing regulation were approved in 2016 which precisely regulate this sector. The aim was therefore to facilitate access to credit by the Over 60s and the result was achieved thanks to a joint effort by Consumer Associations, ABI, MISE and Parliament.
How it works
The lifetime loan is a mortgage loan that allows those over 60 to obtain liquidity that grows as the value of the property and the age of the applicants grow. Some particularities are inserted into this very simple scheme
The first consists in the fact that there is no deadline and the moment of repayment is chosen by the subscriber, who can decide whether in the meantime to periodically repay the interest (to keep the debt constant) or not to pay any repayment installment; in this case the unpaid interest is accumulated and capitalised.
The second aspect arises from the fact that, in the event that the subscriber never repays the loan, the heirs will be able to choose how to proceed; they will be able to sell the property and repay (withholding any portion exceeding the repayment) or to defer the repayment through their own mortgage. In this sense, it is the only form of financing that protects the heirs: in fact, if there are amounts left over from the sale, these go to the heirs, while if the value of the property is not sufficient, it is the bank that sells it and records the loss , without being able to ask the heirs for anything else.
Who cares
The statistics and the agenda of these days clearly indicate that the audience of subjects potentially to have better access to credit is potentially very large and according to some estimates it reaches 2 million subjects. In Italy in particular, these estimates are strengthened by the cases in which the loan is intended to help the children, substantially as if it were an advance on the inheritance; this is an extremely widespread and common case study in which parents want to help their adult children move house or invest in their own businesses.
Who proposes it
Despite the fact that there is such a large need, there are still few lenders who have joined this initiative, but the context is destined to accelerate rapidly already in the short term. The diffusion of a wider offer will in fact be the catalyst to help even greater information and the progressive diffusion of the life loan as an "ordinary" form of credit.
The new challenges
Today we are in a context in which institutions and politics have done their job and delivered complete and reliable legislation. Now it is necessary to improve training within banks and information for the Over 60s. To this end, a further commitment by all operators is essential, including consumer associations and trade associations. On the other hand, the credit system must expand the number of proposing banks and spread across the various networks to make it a truly available solution to all and finally reach a real intergenerational credit inclusion
