Remortgaging for home improvement

NeptunesMoon

my mam is living on her tod and only gets so mcuh money a month. shes in the house we all grew up in, a 4 bed thats about 35 years old, it gets cold during the winter and although shes had insulation in the attic done, it could have a lot more done to keep it warmer for her in the winter such as getting double glazed windows. it could also do with a few more improvements that would essentially add value to the house. the problem is she has no money.

to improve her quality of life and comfort, would remortgaging be a good solution? what way does this work exactly and is it easy to be approved? Is it just a case of selling the bank a % of your house?

Say if she wanted 25k and the house was worth 250k, would she then need to pay that 25k back over time, or would it be that the bank would own 10% of the value of the house? If the market price dropped to 150k, could they be paid off with 15k, or if the market price rose to 400k, would they need 40k to be paid off?


Another option I was thinking of would be to lend her money myself, but I'm not sure I'd ever get it back. I don't have money to lend really but would like to see her comfort improved. I don't even have 25k to my name so couldn't afford anything like that and would probably be much better off maybe trying to get my own mortgage for my own place, but say if I gave her 2.5K, and if say the house is being divided between all 4 kids in her will, would it be best to do it as a % of current property price? So again, if the house is now worth 250k, I get 1% and then the 99% is divided between the 4 of us? If the house was worth 400k in 10 years, would it be fair for me to get 4k and then 396K be divided between the 4 of us? If it dropped to 150K, should I get my 2.5K and then 147.5k be divided between the 4 of us, or would I lose out here?

cheers for any help... the winter is coming

vagazzled

Hi, would your Mum consider downsizing at all, as to remortgage and not repay could mean her losing the house. I know the house would be sentimental to her, but if as you say she has no money, she will find it much harder to keep in the long run even with the BER being brought up.
Personally I wouldn't mix family and large amounts of money either, I understand you want whats best for her, but it could damage your relationship if down the road you feel resentful you can't afford a deposit in the future if the money is not paid back.

moonshadow

Your mum may well qualify for this scheme, my parents in law did.
http://www.seai.ie/Grants/Warmer_Homes_Scheme/

NeptunesMoon

cheers for the replies, moonshadow, that's great, will get her to have a look at that. Cavity wall insulation could be a big help. I remember her mentioning something about a fuel allowance but she doesn't drive so will have to ask her what it was about again.

vagazzled, she has considered downsizing, but I actually advised her against it. The places she's been looking at are maybe only 50k cheaper, but might be 2 bedroom instead of 4 so would probably hold less value as the market would improve, and that 50K she'd get might go very quickly in terms of getting the place to a stage she'd be happy with in terms of comfort and interior decorating etc and then she'd quick enough be back to where she is now but could be worse off, having a less valuable house in a less desirable location with less rooms to utilise if she decided to try getting a lodger or something (she has before but didn't like the experience with several different tenants). It's a huge gamble to take. There would be some advantages such as having a smaller house to maintain. She wouldn't like to live in apartment and likes her back garden, although this is another current expense as she pays someone to cut the grass etc.

RentDayBlues

NeptunesMoon wrote: »

cheers for the replies, moonshadow, that's great, will get her to have a look at that. Cavity wall insulation could be a big help. I remember her mentioning something about a fuel allowance but she doesn't drive so will have to ask her what it was about again.

vagazzled, she has considered downsizing, but I actually advised her against it. The places she's been looking at are maybe only 50k cheaper, but might be 2 bedroom instead of 4 so would probably hold less value as the market would improve, and that 50K she'd get might go very quickly in terms of getting the place to a stage she'd be happy with in terms of comfort and interior decorating etc and then she'd quick enough be back to where she is now but could be worse off, having a less valuable house in a less desirable location with less rooms to utilise if she decided to try getting a lodger or something (she has before but didn't like the experience with several different tenants). It's a huge gamble to take. There would be some advantages such as having a smaller house to maintain. She wouldn't like to live in apartment and likes her back garden, although this is another current expense as she pays someone to cut the grass etc.

Why does it matter the value of the new home in an improving market??!? If your mum wants to move to a smaller, more manageable property that she can buy outright and have some money left over to live on, what exactly is the problem with this?

Triceratops Ballet

This came up for us when mother was ill and her house needed to be adapted. One of the things we considered was one of us moving back in, having the house put in our names and us taking out and paying the mortgage. I cant offer any advice on how this might work though as unfortunately she passed away before we could do anything.

In terms of equity release this is what I did myself to rennovate the house and it was essentially the same as applying for a full mortgage. That may be the bank we used but if your mother has limited means they might not consider her.
Is she in a credit union?, they might be more helpful

NeptunesMoon

Maybe I haven't thought it through properly, or maybe it doesn't work this way, but would it not make more sense to get a 25K remortgage to get the improvements done and own 225K of house worth 250K market value, rather than getting a house for 200K and that extra 50K being spent on improvements in that house, redecorating to my mams style, solicitor fees etc for moving, all the stress and ending up with a house that's still worth only 200K, so she's down 25K and has less renting potential for lodgers, less space for family to stay over, all the of moving and dealing with solicitors, banks, buyers, sellers, the big big gamble she won't like the area and will regret the whole thing, and then she has a house whos market value might rise to 250K where the other one might rise to 350K.

Triceratops Ballet

RentDayBlues wrote:

Why does it matter the value of the new home in an improving market??!? If your mum wants to move to a smaller, more manageable property that she can buy outright and have some money left over to live on, what exactly is the problem with this?

Agreed, a home is so much more than just a financial asset. Part of its estimated value that should be considered is how functional it is for the people who live in it.

Your mother is in a house that is too big for her and is paying from her limited means to maintain it. A smaller, newer property would be less costly to heat and maintain and could improve her quality of life. I'm sure it can feel isolating as you get older in a big empty house, and worrying about keeping things going can be stressful. A smaller place might make her happier and feel more secure. The value of a house is only important if it is going to be sold in the short term, in the long term it is serving the function of home rather than that of financial asset.

Humour Me

Can you explain why you think the value of the house is so important? This is obviously going to be the house that your mother lives in for the rest of her life. The potential increase in house value won't change anything for her unless she is planning to sell and move again in the future.

NeptunesMoon

dottie_lottie wrote: »

This came up for us when mother was ill and her house needed to be adapted. One of the things we considered was one of us moving back in, having the house put in our names and us taking out and paying the mortgage. I cant offer any advice on how this might work though as unfortunately she passed away before we could do anything.

In terms of equity release this is what I did myself to rennovate the house and it was essentially the same as applying for a full mortgage. That may be the bank we used but if your mother has limited means they might not consider her.
Is she in a credit union?, they might be more helpful

cheers for the input and sorry to hear about your mam. any of us moving in with her definitely isn't an option. is equity release giving away a % or is it simply getting a regular loan with the house as a guarantee?

Triceratops Ballet

NeptunesMoon wrote:

cheers for the input and sorry to hear about your mam. any of us moving in with her definitely isn't an option. is equity release giving away a % or is it simply getting a regular loan with the house as a guarantee?

Regular loan with the house as a guarantee, it's a steal for the bank tbh. The whole value of the house set against a ltv of 20%, but it was the only way they'd do it. I have no worries about defaulting but I had to jump all the hoops of a standard mortgage. It took nearly 5 months to get approval and this is only in the last year. I got my approval in Feb.

NeptunesMoon

dottie_lottie wrote: »

Agreed, a home is so much more than just a financial asset. Part of its estimated value that should be considered is how functional it is for the people who live in it.

Your mother is in a house that is too big for her and is paying from her limited means to maintain it. A smaller, newer property would be less costly to heat and maintain and could improve her quality of life. I'm sure it can feel isolating as you get older in a big empty house, and worrying about keeping things going can be stressful. A smaller place might make her happier and feel more secure. The value of a house is only important if it is going to be sold in the short term, in the long term it is serving the function of home rather than that of financial asset.

Humour Me wrote: »

Can you explain why you think the value of the house is so important? This is obviously going to be the house that your mother lives in for the rest of her life. The potential increase in house value won't change anything for her unless she is planning to sell and move again in the future.

I replied on the value in post #7 above.

The type of place she'd want, a house with a garden will still have most of the same maintenance costs as the equivalent type property with 2 extra bedrooms. I just have a big fear of her ending up back to square one and regretting the whole thing, having spent all her money, living in a place she's not happy with and with no chance tor reverse it. She's not even retirement age yet.

NeptunesMoon

dottie_lottie wrote: »

Regular loan with the house as a guarantee, it's a steal for the bank tbh. The whole value of the house set against a ltv of 20%, but it was the only way they'd do it. I have no worries about defaulting but I had to jump all the hoops of a standard mortgage. It took nearly 5 months to get approval and this is only in the last year. I got my approval in Feb.

cheers, what does defaulting mean?

Triceratops Ballet

NeptunesMoon wrote:

The type of place she'd want, a house with a garden will still have most of the same maintenance costs as the equivalent type property with 2 extra bedrooms. I just have a big fear of her ending up back to square one and regretting the whole thing, having spent all her money, living in a place she's not happy with and with no chance tor reverse it. She's not even retirement age yet.

I assume that with the house prices you're talking about she is in Dublin? So she could pick an area that she knows well and is near where she currenly is. The beauty of her situation is that she has time to look she is not rushing to sell the house or move. So she can spend time looking for areas she might like finding out about them, talking to people she knows who live nearby.

The way you're talking about it you'd swear that the only option was to buy a house straight away in Timbuktu and be stuck there for all eternity! I mean if the house accross the road was smaller and for sale that would be an easy move and comparitively much less stressful.

Your numbers seem a little off too its 25k to rennovate her existing house but 50 to rennovate a new one? 50k worth of rennovations is a hell of a lot of work like thats money for structural work not cosmetic changes to a house.

Triceratops Ballet

NeptunesMoon wrote:

cheers, what does defaulting mean?

Not paying it back and the bank taking the house

April 73

Some more info would be helpful. What age is your mother & is she working? Does she have an income? Most banks would require her to have an income other than a pension to give her a mortgage & most want a mortgage repaid by 65 or 68 years of age.

So as an example if she is 55 and borrowed €25k, that, plus the interest would need to be repaid by the time she is 65 (assuming she is working)

If I were you, I would first get quotes done for the work you think the house needs to bring it to a comfortable level. Then see what grants are available for insulation etc. Depending on the costs involved, then look at funding options - a mortgage, a home improvement loan or you & your siblings chipping in together to fund the work.

Don't write off the idea of her moving to a smaller, newer, more easily maintained house. It won't get easier to maintain a large house as the years go by, it will only get more difficult. The value of the property or its potential value in the future isn't the most important issue for your mother. Living somewhere comfortable that she can independently manage the upkeep of, for as long as possible, should be the goal.

caviardreams

What about an apartment? A lot of them have very good BERs and are very well insulated now e.g. B1, would be very low maintenance and could find one near where she is currently living.

If you remortgage the property, the €25k will have to repaid plus interest, and depending on the time period of the loan and the interest rate, you could end up paying nearly double. It also adds a significant stress to have debt, especially as your mother has been used to living mortgage free. Do you think she would have the means to make the repayments?

athtrasna

OP it strikes me that either your mother or one of her children are thinking about inheritance with a four bed being worth more.

Otherwise the move to a smaller property would surely be more attractive, cheaper to run, smaller to clean, easier to maintain, as well as warmer?

ted1

Would she consider renting a room or three for a few months? It's tax free up to 12k. Say 400 a room, after 1 year she'll have 4800 per room.

Renting a room or two would look to be the best solution to me. I can very much understand not wanting to sell up and move as a house is more than just a building it has a lot of sentimental value.

If it's in Dublin she should have no problem getting Woking professionals with the way the market is, even better she might be able to get a person or persons who are only in Dublin during the week for work and go home to family at the weekends leaving her with the place to herself most weekends.

Lando Griffin

ted1 wrote:

Would she consider renting a room or three for a few months? It's tax free up to 12k. Say 400 a room, after 1 year she'll have 4800 per room.

It's a cold house with no double glazing, it would be some heating bill over the winter. Have to agree with the inheritance post previous and if you are really concerned about the mothers wellbeing in the future then downsize to a house with good ber rating and put some money into mobility features in the future with the 50k. There would be nothing worse than in 10 or 15 years time having spent 25k on insulation etc to find out the house is not mobility friendly for an older person, then what are the options. Do you then rip into it and spend 25k getting it up to scratch and having all upstairs unusable?

caviardreams

Ethan Scarce Pair wrote: »

Renting a room or two would look to be the best solution to me. I can very much understand not wanting to sell up and move as a house is more than just a building it has a lot of sentimental value.

If it's in Dublin she should have no problem getting Woking professionals with the way the market is, even better she might be able to get a person or persons who are only in Dublin during the week for work and go home to family at the weekends leaving her with the place to herself most weekends.

In theory it makes sense. However, opening up your home and sharing with a stranger, is not an easy situation for somebody of that age who has been used to living with family etc. for many years.

NeptunesMoon

dottie_lottie wrote: »

I assume that with the house prices you're talking about she is in Dublin? So she could pick an area that she knows well and is near where she currenly is. The beauty of her situation is that she has time to look she is not rushing to sell the house or move. So she can spend time looking for areas she might like finding out about them, talking to people she knows who live nearby.

The way you're talking about it you'd swear that the only option was to buy a house straight away in Timbuktu and be stuck there for all eternity! I mean if the house accross the road was smaller and for sale that would be an easy move and comparitively much less stressful.

Your numbers seem a little off too its 25k to rennovate her existing house but 50 to rennovate a new one? 50k worth of rennovations is a hell of a lot of work like thats money for structural work not cosmetic changes to a house.

Around Dublin yeah. She has time of course, but the less cold winters she needs to put up with the better. 25 VS 50k is that 25K should cover getting her current home up to a much greater standard of living and should take care of a lot and possibly all of what needs doing, while giving an end result of a place she's happy to live in. The 50K would be going towards the same, along with all solicitor fees etc (again, I haven't a clue how much this is but assume it's pricey enough), all associated costs with moving as well as being a huge undertaking for her mentally and the end result is even after spending everything, she may not be happy with the area as much as the old place and she'll be in a much worse situation than if she had of remortgaged.

April 73 wrote: »

Some more info would be helpful. What age is your mother & is she working? Does she have an income? Most banks would require her to have an income other than a pension to give her a mortgage & most want a mortgage repaid by 65 or 68 years of age.

So as an example if she is 55 and borrowed €25k, that, plus the interest would need to be repaid by the time she is 65 (assuming she is working)

If I were you, I would first get quotes done for the work you think the house needs to bring it to a comfortable level. Then see what grants are available for insulation etc. Depending on the costs involved, then look at funding options - a mortgage, a home improvement loan or you & your siblings chipping in together to fund the work.

Don't write off the idea of her moving to a smaller, newer, more easily maintained house. It won't get easier to maintain a large house as the years go by, it will only get more difficult. The value of the property or its potential value in the future isn't the most important issue for your mother. Living somewhere comfortable that she can independently manage the upkeep of, for as long as possible, should be the goal.

She's 63 and not working, she gets maintenance from ex husband so looking very unlikely based on what you say she'd get a mortgage. Unfortunately siblings chipping in for the work isn't an option. I'm the only one who could afford to contribute anything and it wouldn't be enough to make any impact on what needs to be done.

caviardreams wrote: »

What about an apartment? A lot of them have very good BERs and are very well insulated now e.g. B1, would be very low maintenance and could find one near where she is currently living.

If you remortgage the property, the €25k will have to repaid plus interest, and depending on the time period of the loan and the interest rate, you could end up paying nearly double. It also adds a significant stress to have debt, especially as your mother has been used to living mortgage free. Do you think she would have the means to make the repayments?

Apartment is definitely not for her. It would certainly be easier for her in terms of not having to take care of a garden etc, but she has her preferences, like the garden an open fire etc. Perhaps further down the line it's a step she might have to accept and it would probably be more viable to do so from her current place than from a smaller place when all her downsizing funds have dried up.

athtrasna wrote: »

OP it strikes me that either your mother or one of her children are thinking about inheritance with a four bed being worth more.

Otherwise the move to a smaller property would surely be more attractive, cheaper to run, smaller to clean, easier to maintain, as well as warmer?

of course its in all of our interests including my mothers to retain the value but its in everyones best interest that my mother is comfortable and happy with the place she's in. Her current place certainly needs improvement but it also has factors that shouldn't be ignored that are pro's to her wanting to remain there such as view, area, neighbours, open fire, space for her grandkids to play, space for her grandkids to stay, space for her children to stay, there always being a room if any of us ever need to move home, opportunity to get a bit of income if she decides to try lodgers again, space for all her belongings (she's a hoarder)*, sentiments*.

*these are debatable, it could be good for her to cull her belongings and it could also be be mentally beneficial to move, but emotive reaction could go either way.

Those two extra bedrooms when not in use aren't going to be costing much to run other than the extra heat they'll absorb or adding much to the maintenance and won't really require cleaning, but they will give her a sense that she always has a place for her family to stay if needed and although that may not happen much, I think the idea is important to her.




A move would be a very risky step to take and it would be an absolute disaster if she ended up not being happy. At least where she currently is now, her main complaints are structural (and having no money to do anything about it). So rather than remortgaging, is there another option where you simply give the bank a guaranteed €25,000 of the value of your house that they will get unless it's paid off, as opposed to a loan that has to be paid off?

Dr.Internet

why doesn't your mother take in 2/3 lodgers for a year? Use the money to improve her house?

NeptunesMoon

cheers for the replies while i was writing the above.

renting out the rooms is still an option she considers. she's done it recently but just hasn't had the best experience and does like her privacy. I'm telling her she has a very good opportunity to earn money by renting out the rooms that she wouldn't have if she moved to a smaller place, she has 3 free rooms in the house and could probably get 10,000 per year easy enough if they were rented out full time for that one year, she's never had a proper go at it though and given she's still relatively young, this could go a long way to getting some money together for her later years.

Mobility is something we hadn't really considered

caviardreams

No disrespect OP, but what would be in that kind of arrangement for the bank? They are in the business of making a profit, and would be looking for a healthy return on their 25k investment via interest repayments. They are not going to give you 25k and expect nothing in return.

I think you have to put what is best for your mother first. Have you discussed how she might feel about an apartment? They often have common green areas and she could have plants etc on her balcony? Any maybe if her home was not so cold she would not need an open fire so much?

MouseTail

I really don't think there is any way for her to get the 25k from a bank or financial institution. If she wants to stay where she is, look at cheapish ways of making the house winterproof. Look at a stove instead of an open fire, get thermal curtains etc.

NeptunesMoon

caviardreams wrote: »

No disrespect OP, but what would be in that kind of arrangement for the bank? They are in the business of making a profit, and would be looking for a healthy return on their 25k investment via interest repayments. They are not going to give you 25k and expect nothing in return.

I think you have to put what is best for your mother first. Have you discussed how she might feel about an apartment? They often have common green areas and she could have plants etc on her balcony? Any maybe if her home was not so cold she would not need an open fire so much?

Yeah, I started thinking how would the bank make any money and why would they do that half way through writing the above, just being hopeful I guess

She's adamant she wouldn't like to live in an apartment so I think this can be ruled out for now. The open fire is more a comfort of feeling than for heat, she grew up in the country and it's something she loves.

MouseTail wrote: »

I really don't think there is any way for her to get the 25k from a bank or financial institution. If she wants to stay where she is, look at cheapish ways of making the house winterproof. Look at a stove instead of an open fire, get thermal curtains etc.

She's definitely open to a stove, anything where solid fuel and a real fire burn This would be one of the things getting done with a loan. Double glazed windows, a stove and a few other bits done up. It certainly wouldn't be wasted or spent unwisely and would improve the place by miles. It's just how best to get the money is the question!

tinkerbell

This to me just smacks of I-need-to-get-as-much-inheritance-as-possible ... OP, you need to actually do your research. Structural changes cost a lot of money. If your mother's house is 35 years old then most likely it'll need a heck of a lot more than a lowly €25k ploughed into it to bring it up to today's standards. Buying a smaller, newer build house would not require €50k. I don't understand where you are pulling these random figures from, and legal fees for selling a house so not cost tens of thousands of euro!

It's all well n good saying it's nice to have a 4 bed house for the few days that grandchildren might stay but you need to look at the practicalities. How often do family stay with her? If it's on a very regular basis then it might be worth keeping the house and improving that but if family only stay once every so often then it is not worth her staying in a house she can't afford to keep.

Also, no bank will lend her €25k as a remortgage if she's 63. And a personal loan for €25k would have high repayments.

April 73

Moving house is costly. I did it this year & by the time you have paid an estate agent, a solicitor, land registry, a moving company and stamp duty you can easily spend €10,000 to €15,000 based on the value of your mother's property.

You need quotes for the work you want to do before you can make any decisions.
Could either you or a sibling borrow the money on a ten year term with your siblings & mother contributing to the repayments each month?
A lodger would be a good option - extra money & some company in an otherwise empty house. Upgrading the house should add value & make it more comfortable. It doesn't need to reach an A or B rating to be comfortable & relatively cost-effective to heat.

ted1

tinkerbell wrote: »

This to me just smacks of I-need-to-get-as-much-inheritance-as-possible ... OP, you need to actually do your research. Structural changes cost a lot of money. If your mother's house is 35 years old then most likely it'll need a heck of a lot more than a lowly €25k ploughed into it to bring it up to today's standards. Buying a smaller, newer build house would not require €50k. I don't understand where you are pulling these random figures from, and legal fees for selling a house so not cost tens of thousands of euro!

It's all well n good saying it's nice to have a 4 bed house for the few days that grandchildren might stay but you need to look at the practicalities. How often do family stay with her? If it's on a very regular basis then it might be worth keeping the house and improving that but if family only stay once every so often then it is not worth her staying in a house she can't afford to keep.

Also, no bank will lend her €25k as a remortgage if she's 63. And a personal loan for €25k would have high repayments.

It wouldn't cost 25k to do work. Windows 3k, internal insulate rooms 900 each. If the boiler works no need to replace it. It'll take a long time to make back the capital expenditure.