Liquidating your property for a lump-sum pension payment – while still getting to reside in your home

Many property owners would love to be able to carry on living in their property into old age. One complicating factor is that, for many, the state pension is barely enough to live on. If they then also haven’t yet fully repaid their mortgage, their financial situation can be tight. The various options for liquidating property to generate pension income can provide the necessary financial assistance without having to move out. What options do property owners have when liquidating their property for a lump-sum pension, for example?

In general, the process for liquidating a property for the purposes of drawing a pension is as follows: The house is sold to an investor, for example. However, the owner remains resident in the house. This is called a free right of residence (‘kostenloses Wohnrecht’). The buyer gives the seller the capital released through the sale of the property. If former owners wish to have greater creative scope in disposing over their wealth, a lump-sum payment is a good choice.

Benefits of a lump-sum payment

What does this greater creative scope offered by a lump-sum payment mean? Amongst other things, a lump-sum payment means that the outstanding mortgage on the property can be paid off in one go. It might also mean finally being able to go on that wonderful, long-imagined holiday. Yet a lump-sum payment doesn’t just offer financial benefits. The contract can be excellently tailored to meet the needs of both buyer and seller.

Combining a lump-sum payment with a pension

Together with the free right of residence, a lump-sum payment can be combined with a regular pension payment. Contractually, the seller can choose between a fixed-term or a life-long pension payment. Irrespective of which combination is agreed on, the amount of the pension payment affects the size of the lump-sum payment. An estate agent experienced in the liquidation of property for pension-related purposes is the best person to advise on which form of pension is optimal for the seller’s situation and which factors the seller must take into consideration.

The balance of pension payments and the lump-sum payment

Once the owner has decided on a form of pension-generation involving a blend of lump-sum payment and pension payments, there is only one question left to answer: how big should the payments be? One thing you have to be aware of here: the bigger the regular pension payments are, the smaller the lump-sum capital payment will be.

How can an estate agent help?

An estate agent will take account of the individual situation of the seller, and offer the best solutions for the entire liquidation process. They will bring together the right buyer and the right seller. The property expert will also take care of precisely calculating the size of the pension payments. In addition, they will help with the laborious contract negotiations and ensure that every requirement is properly taken into account.

Do you want to find out more about generating a pension by liquidating your property? Then get in touch with us! We are happy to help you.

 

For more information:

https://www.degiv.de/immobilienverrentung/

https://www.deutsche-leibrenten.de/

https://www.pflegehilfe.org/immobilienverrentung

 

Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.

 

Photo: © AndrewLozovyi/Depositphotos.com

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