VIAGER PROPERTY REVERSE ANNUITY MORTGAGE (VIAGER) 2023 VIAGER SYSTEM DEFINITION HOW IT WORKS BOUQUET ADVANTAGE INCONVENIENT 2023
WHAT IS A REVERSE ANNUITY MORTGAGE (VIAGER) 2023? DEFINITION
A reverse annuity mortgage (Viager) in 2023 is by definition a real estate agreement where the buyer provides with down payment and a pension paid regularly to a seller of a property for the rest of his life with the right to still living there until the end of his or her life.
The reverse annuity mortgage is a form of real estate sale (in France essentially) where a generally elderly person decides to sell his or her house in return for a life annuity and down-payment (bouquet), before his or her death, possibly retaining (subject to clauses) the right to stay there.
The Viager system for a property is advantageous for the owner who wishes to take advantage of the value of his property while living there and this option is very useful for elderly people who do not have heirs or who wish to enjoy life without leaving property or values after their death.
A reverse annuity mortgage (Viager) in 2023, to be calculated must be based not only on the value spread over time but essentially on the number of years that the beneficiaries of this annuity will benefit it and this will be based on the probabilities of longevity calculated by the institution offering this financial service.
The Viager payment plan is in principle a good way to spread the value of your property or your savings over the rest of your life with the calculation of a pension which becomes a bet for both parties, everything will depend on the lifetime of the beneficiaries of the annuity.
The amount of the life annuity will therefore depend on the age of the person who has subscribed to this option, also called reverse financing, and which will be all the lower the younger the person is, since statistically they will live longer and vice versa if the person has already reached an advanced age.
Thus, life annuity is nothing but a form of payment for life which is made from a sum of money or real estate and will be distributed monthly for the benefit of a person for the rest of his or her life.
WHAT ARE THE ADVANTAGES, DISADVANTAGES, RISKS OF THE VIAGER (REVERSE ANNUITY MORTGAGE)?
The viager or reverse annuity mortgage, like any financial solution, has advantages but also disadvantages for both the property seller and the buyer.
Reverse equity mortgages or Viager are very random in the sense that they are speculative because they are based on probabilities and statistics of the length of the life of the seller.
Thus in the event that the seller dies as the statistics predict, both parties will be “winners” because the buyer recovers the property “on time” the property and will no longer pay rent and the seller will have benefited from the rent as planned.
If the seller lives longer than the calculated life expectancy, he will benefit not only from being still alive but also longer from an annuity which is negative for the buyer since he will continue to pay beyond what was planned.
In the event that the seller dies before the date provided for by the insurance statistics, the buyer will therefore pay less annuity than planned and the seller will not have fully benefited from this annuity.
If we can objectively decide between the advantages and disadvantages:
- The advantages for the buyer are that he can acquire a property with a reduction on its true price which corresponds to the occupation of the premises of the seller who does not pay rent.
- The advantages for the seller (without heir) is that he will receive money while occupying the premises until his death.
- The disadvantages for a life annuity buyer is that the profitability of his transaction will depend on the life of the seller, the longer the latter lives, the more the buyer will pay in addition to any major maintenance work.
- The disadvantages for the seller are that the sale is made at a lower price than the market price and in the event that he dies prematurely in the absence of reversibility of the annuity, the spouse will become the big loser.
- This form of real estate acquisition and sale is very speculative since it is a bet taken by two parties, the buyer's wish being that the seller does not live too long while the buyer will hope to benefit the longest from his pension. Thus the life annuity offers rare possibilities of seeing both parties be win-win.