Selling a house on an annuity: features, advantages & disadvantages

For those who want to sell their house and still want to live in it, selling on an annuity is an interesting option. You can sell your house on an annuity by having an agreement drawn up by the notary. The seller then sells the so-called bare ownership to the buyer, but retains the usufruct of his own house. The buyer usually pays part of the purchase price when purchasing and then pays monthly interest from then on. He must pay that interest as long as the seller lives. If the seller dies, the buyer becomes the full owner of the home. To find out whether an annuity sale is interesting in your specific case and how to proceed, you can consult a notary. You can request free, no-obligation price quotes online from notaries in your region. How exactly does annuity sales work and what are the advantages and disadvantages?

Annuity sales

Price and interest

When selling on an annuity basis, the buyer of the house immediately pays part of the purchase price. The remainder of the purchase price is converted into interest that the buyer will pay to the seller every month.

Life expectancy

The buyer will have to pay this interest as long as the seller is alive. To calculate the interest that the buyer will have to pay each month, the official life expectancy of the population in the country is used.

Advantages and disadvantages

Lifespan

Because the buyer is obliged to pay the interest as long as the seller lives, a long lifespan for the seller can be disadvantageous for the buyer. If the seller lives longer than the life expectancy statistics, then the buyer is doing a bad thing. After all, the interest he has to pay is based on the official life expectancy of the people in the country.

Death and annuity

When selling on an annuity, it cuts both ways: if the seller dies suddenly, or sooner than expected, this works out well for the buyer. Because after the death of the seller, he no longer has to pay interest. Another possibility arises when the buyer of a home on an annuity dies before the seller dies. In that case, the heirs must take over the agreement. The heirs are therefore obliged to continue paying the interest until the seller dies.

Sale on an annuity with retention of usufruct

Usufruct

A special case of annuity sales is when the seller retains the usufruct of his home. The seller only sells the so-called “bare property” and can live in the house for the rest of his life. The price that the buyer must pay is slightly lower since the seller retains use of the house.

Continue to live in the sold house

If the seller dies, the buyer becomes the full owner of the home, which means he can also use the home. He is therefore only allowed to live in it when the seller dies. This construction of selling an annuity with retention of usufruct is interesting for several reasons. This way you can continue to live in your house even though you have already sold it. After all, the buyer only becomes full owner, with the usufruct, when you die.

Supplement your pension

Another interesting reason is that you can supplement your modest pension a little by selling an annuity. This form of annuity is also a good option for people without heirs . Because if you have heirs, they will be left with nothing when you die: the ownership will then be fully transferred to the buyer. If you have no heirs, you do not have to leave anything.

Advice notary

It can be agreed between the various parties that the annuity will be indexed. The interest is initially lower, but is then indexed annually to a certain percentage. To find out more details regarding the sale of an annuity, you can consult a notary. The notary will further investigate your specific situation and provide more information about the precise options for selling your house on an annuity. The notary can also provide you with detailed information about what should be included in the deed. You can request price quotes from notaries in your region online so that you get a good idea of how much such advice can cost you. These quotations of prices from notaries are free and without obligation, and therefore do not oblige the applicant to anything.