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Mortgages for Funding a Stay at a Retirement Home or as an Additional Pension. Reverse Mortgages


Old age. Is there anything that can stop it? Of course not. But it is in our hands to determine whether or not this will be a pleasant period.

Undoubtedly, age has its effects, and at some point or another, most of the population “catches” various diseases and begins to experience old age and fatigue. In the crazy world in which we live, these obstacles do not hinder us from feeling young and continuing energetically with our daily routines: children, grandchildren and the entire family.

However, our living environment can sometimes become less suitable to our current lifestyle, if we are in need of a helping hand (double meaning intended). Sometimes, in our original environment, we feel as though we cannot keep up with the pace. In this situation, a strong desire appears to live somewhere which would serve as home sweet home, but would also provide lots of fun and activities. Additionally, we want to feel we belong, and this can only be achieved if we live among people of similar ages – our natural environment. Our families also feel they would be more confident knowing that we are being properly supervised and are in good, supporting hands.

In recent years in Israel, there is an increasing trend consisting of the demand to stay in protected condominiums, retirement homes or nursing homes. This has occurred in light of the warm, friendly service, social activities, cultural abundance, workshops, lectures, excursions and close medical supervision provided. However, funding such costs is not at all simple, and has long become a task that only few households can fulfill without the assistance of a loan or mortgage.

As an example (depending on the geographical area and standard of the stay), the tenant is required to make a monthly payment of 6,000 to 15,000 NIS, in addition to a deposit of about 500,000 to 1,000,000 NIS. Additionally, there are “admission fees” and “maintenance fees” and the entire “deal” turns out to be very expensive.

As in many other instances, mortgage banks and insurance companies can come to one’s assistance. Mortgaging an apartment or house owned by the retired person or a younger family member wishing to care for their elderly relative allows one to take a mortgage loan characterized by convenient terms as far as the loan period, interest and monthly payments. The loan can be adequate not only for covering the costs of the stay, but also for complementing the person’s pension with additional income.

Recently, the term and product “reverse mortgage” has developed in Israel. This means that the elderly person mortgages his apartment or house, and based on various criteria can use the amount obtained for some purpose such as staying at a retirement home, complementing his income or supporting other family members such as children and grandchildren.

A reverse mortgage is a funding solution for the elderly, which does not require any monthly payments throughout the loan period. The mortgage loan is provided for an unlimited period, and is only paid up after the apartment / house is sold, from the proceeds. In many cases a reverse mortgage is the only solution allowing the person to maintain his former life style and the full standard of living required by this population.

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