Remortgaging for home improvement

tinkerbell

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.

35 years old is not old for a house, I think 25k is a lot more than would be required for some good upgrades.

NeptunesMoon

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.

Yea a few posts before yours smack of suspicion that I'm interested in inheritance more than the well being of my mother, which is upsetting to have to defend. None of you know my mother. She is very bad managing money. If she downsized, there will be a huge chance that she will soon end up in the exact same situation as she is now and if that happens, which is highly likely, it would be irreversible and she'd be in a far worse situation than she is now. I've explained many other reasons in the posts above. She's only 63, to me she still has plenty of opportunity to improve her situation and an easy way to do that would be through letting the spare rooms and getting an income she could actually use to enjoy life a bit more.

April 73 wrote: »

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.

This is exactly what I fear, that after all the costs associated with moving and getting the new place to that she'll have no money left over and it will have made no positive impact other than having a cheaper electricity bill every month, but it has potential for huge negative impact.

Unfortunately none of my siblings are in a position to contribute to any loan repayments. I'm the only one of the 4 of us who could help, but I wouldn't feel comfortable getting such a big loan out as my mam is so bad with money and repayments.

ted1 wrote: »

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.

Do you think windows would only be 3K? I was thinking 10k for decent double glazed. There's 6 average size bedroom windows about 1m wide each, a bathroom window about 1.5m wide, then a sitting room and a kitchen window about 2.5m wide x 1.5 tall each.

Would the internal insulation be covered in the cavity wall insulation in that grant I wonder?

Ethan Scarce Pair wrote: »

35 years old is not old for a house, I think 25k is a lot more than would be required for some good upgrades.

Thats great to hear. Getting quotes is a good start for sure, but getting back to the purpose of the thread, is remortgaging really the only option we have given our situation?

Desmonddoyle

NeptunesMoon wrote: »

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

To answer you initial question - it is possible to release equity in the house for cash now. Less common here, but a lot of people in the states and other countries would use this as part of their pension planning, basically selling their house now in return for cash, and then staying in the house for a nominal rent or whatever is agreed.

In your case, you (your mom) could release a small part of the equity in the house (25k) now, and it would only have to be repaid when your mother either moves or dies. You would need to speak with a financial advisor to ensure you aren't getting screwed by some sub-prime lender. Also, as you mom is very young, it might limit what you can borrow etc.

Personally, I'd sell up at 250k+, buy a smaller, warmer house in turn-key condition close to relatives for 200k. She would have 40k+ in the bank that she could drawdown when needed, have lower property charges, lower heating bills, less cleaning/ cheaper maintenance, be closer to loved ones and so on and so forth...

You also have to think of the deterioration that an old, large 4 bed will suffer during the next 20 years with only one elderly person living there. Besides, the HSE will run down your inheritance to nothing if god forbid, she ever needs care. She's only 63 now - she should try and improve her lifestyle as much as she can now and benefit from all that hard work over the years.

helimachoptor

is the credit union an option?

Get a builder in and quote for each of the parts of upgrading and think about doing some of them depending on what finances allow

- Double/triple glazed windows 5/6k
- Insulation on external facing wallls probably 10K-12K if its a big house
- sealing of existing chimneys, general draft proofing

However I would also be in the camp of having your mam sell up and downgrade, as she is going to have no real income, having a pot of cash there would be of interest to her i'm sure

helimachoptor

helimachoptor wrote: »

However I would also be in the camp of having your mam sell up and downgrade, as she is going to have no real income, having a pot of cash there would be of interest to her i'm sure

The op suggested she is very bad with money so having a pot of cash to burn through and then end up in a less valuable house is probably not the best course of action.

Finding a way to upgrade the current house would be a far better move and it would most likely be what she wants. People don't want leaving the home they have been in for decades.

NeptunesMoon

cheers for the last few replies, they are very helpful!!!

I've spoken to my mam since and she's reassured me that she doesn't want to move and would rather put money into doing up the house and would be open to getting tenants in again.

She's been granted disability allowance and also gets €1,000pm from ex husband. She also has the fuel allowance (but doesn't drive) and has had attic and side wall insulation done. It didn't make a huge difference to the heat retention in the house unfortunately and I think the windows are still a big problem.

She owes money to the credit union already, around 4k which she's paying about 50 a month off and also owes tax of a few thousand too.

She was asking me about me getting a loan and her paying it back, but I told her I wouldn't feel comfortable doing this as she's so bad with money. She was saying about getting a loan of about 40k, but I think that's far more than what's needed.

I think if the following were done it would greatly improve the place:

Double/triple (seems triple would be best after a quick look of this: https://www.youtube.com/watch?v=1SZGz-0_sms) pane upgrade - 6k
Stove and gas boiler/radiator installation - 7k

then credit union pay off - 4k

She also mentioned about the possibility of needing to sell the house later if she needed to be put in a home to pay for this, this is what you meant by the HSE running the inheritance down I assume?

The priorities are:
Having my mam in a comfortable place she's happy with
getting the place to a level she could easily rent the rooms to get herself an income and out of her debt.

Given she could have another 20 years, I think aiming for some kind of income to improve her quality of life now is a good plan. Any money earned from a downsize would diminish in a few years and she'd be back to living on a tight budget in no time.

The equity release sounds like it could be our best option. Any idea how to find out more on whether this is possible in Ireland and who would be good to talk to? Would someone in the bank be able to advise, or you'd need an independent financial advisor?

MouseTail

You cant do equity release in Ireland, its years since you could. Get a price for the windows, get a top up loan from CU.

NeptunesMoon

Oh that's a pity Might just have to go to CU again. I wonder could I go guarantor on a loan for her if she has difficulty getting approved herself. I just don't want any debts direct in my name.

Dr.Internet

to be honest. I wouldn't go guarantor if I was you

she owes everyone money/loan repayments/taxes which her income doesn't cover

helimachoptor

Dr.Internet wrote: »

to be honest. I wouldn't go guarantor if I was you

she owes everyone money/loan repayments/taxes which her income doesn't cover

in the cold light of day i'd agree.

Also i would assume the 1K a month payment will stop when she hits 65? this is her biggest single income so you have to consider this.

OP, if she wants to stay then...
- You get a loan to pay off her bills and do necessary upgrade works
- Have her do a will that says upon her death the house will be sold, you will receive the 40K + the interest you paid on the loan
- The remaining funds then will be split between the 4 children
- Any remaining mortgage will need to be paid off first


If you are doing down this route, get all the children together and tell them what is happening, nothing tears apart a family like squabbles over money when parents die

Also, if the house is also in your mothers ex-husbands name, he will have claim to it regardless of her will.

jlm29

I know this isn't what you asked, and normally I avoid throwing in comments and opinions when someone hasn't asked for them, but I just opened up my local credit union loan calculator, and stuck in your mothers figures - paying off €4k/yr @ €50/mth is about 9 years worth of payments. She's paying little more than interest every month. If she has no mortgage, and no car to run, and is bringing in €1000 + disability every month (I don't know how much the disability is, and I know it's means tested, but it's probably a couple of hundred a month anyhow?), she really needs to look at her finances, and where her money is going. Also, where she's going to get the money to pay an extra loan back. The CU probably won't give a loan based on possible income for lodgers that she doesn't have yet, and that could leave at a moments notice leaving her income reduced- she would probably have to show that she will be able to pay regardless.
If I were in the Credit union, I wouldn't lend your mam the money. I understand thAt you want her to be more comfortable, but Realistically speaking, it would seem as though she either needs to get someone else to borrow the money (and be prepared to have to pay it back for her, if things go wrong with the lodgers), or else sell up and move. It's that or put up with the house in it's current condition.
The above comment re you borrowing the money and getting her will changed seems reasonable, but your mam could be around for another 30 years. A loan like that is a big thing for you to take on, especially if you might at some point need a mortgage etc if your own.

Desmonddoyle

MouseTail wrote: »

You cant do equity release in Ireland, its years since you could. Get a price for the windows, get a top up loan from CU.

Why on earth not ?

OP - some basic information below

http://www.consumerhelp.ie/equity-release-mortage

You would be best to speak with a financial advisor, as I'm not sure about these kind of companies (I haven't looked into them), but there are lots out there, but I'd imagine they would be wanting a nice cut for their risk

http://www.sixtyplusfinance.ie/
http://www.seniorsmoney.ie/calculator.jsp

Toots

I think you need to get your mum an appointment with MABS because as you point out, she's terrible with money and she's barely servicing her debts as it is.

I'd be slow to look at borrowing any kind of money for her until her finances are in better order.

Diane Selwyn

Toots wrote: »

I think you need to get your mum an appointment with MABS because as you point out, she's terrible with money and she's barely servicing her debts as it is.

best advice on this thread so far! Your mother needs to make plans for how she is going to manage financially for another 20 years or more and that should include contingency for worst case scenarios such as if she becomes incapacitated and unable to look after herself. The idea of spending 50k on 'redecorating' a small house sounds like madness to me!

tinkerbell

Agree - get your mother to see MABS. There is no way you should be giving her a loan or going guarantor on a loan unless you are prepared to fully pay back all that money yourself (because that is what will happen).

evolving_doors

It was mentioned earlier....but does she not qualify for SEAI grant ?HERE that would take care of:

• Attic insulation.
• Draught proofing.
• Lagging jackets.
• Low energy light bulbs.
• Cavity wall insulation.
• Energy advice.

Maybe just talk to MABS/CU and aim to get the 4k loan sorted properly, if she's getting 1K a month then her €50 repayments are a little on the light side, unless she's other stuff we don't know about.
Any relatives/friends might have 1st YR students looking for digs? At least that's not long term if it doesn't work out. 2 students might pay for the windows at least.

You should consider the possibility that care in her final years might be very expensive (health bills/Nursing home/Home Carer) so 'banking' on the house to be worth 250K for yourself and siblings could be a risk. So be wary about assuming you'd get money back if you 'invested'.

I think she's aiming too high too soon (esp. of she's not good with money (as you said). Once you start thinking about 10k budget then 15k doesn't seem that far off... then 25k.

Do one thing at a time. Windows is probably the biggest heat loss at the mo I'd say. Get a lot of quotes so at least you'll know, rather than heaping everything into the 25k figure you're talking about.

Open fire-- may as well get a lump hammer and knock a hole in the wall if it's not being lit 24/7. A stove (even the cheaper inset/insert types) would save her a fair bit on fuel, and you could close the stove door when not using it to seal it off. unlike an open fire.

Be wary of cavity insulation, it mightn't deliver the improvements you think depending on the house/cavity. So maybe survey any neighbours if you can (with similar built houses)... someone's bound to have got it done in the area.

Looks like she should bite the bullit and make hay while there's a rental shortage going on. That could be over in ten yrs time and she might be to old to be doing it when she'd be needing the money the most.

JuliusCaesar

Stove, double glazing (triple not necessary in Ireland), good thick fleece-lined curtains is where I'd start. Then the grant for cavity insulation.

But she needs to get better with money. Make sure any rent from lodgers goes straight into repayments for the loan. I'm sure she's not happy about her prospects for the future if she's a bad manager anyway.

I love my stove. It's hugely cut down on the fuel I use in winter - it burns about a third of what I was piling into the open fire. And no worries about fires - the stove door is closed anyway and off to bed. And still have the look of an open fire. There's a HUGE thread on stoves over on Home & Garden > Plumbing and heating. You might find some good advice over there anyway.

the goon

I agree with everyone who mentioned MABS but just thinking outside the box a little bit, would you be in a position to move in with your mum? It might be possible for you to get a mortgage at below the market value of the house if your mum has a right of residence in the premises. If you could get property valued at i.e 190k due to right of residence, and, had the requisite savings to draw down a mortgage, it would mean:

>You own a property which you were able to purchase for below market value
> Your mother can stay in the house and has 25k funds to do improvements
>Your mother has additional funds remaining of 165k, a guaranteed roof over her head and company. Those funds are available in the event she needs to go to nursing home
>Potentially, large chunk of funds remains in event of inheritance and you actually inherit some of the funds you drew down for mortgage which, in turn can be used to reduce mortgage liability.

I understand there are a lot of variables here but it could also be the best possible compromise? Anyways, regardless, I think if would be good for you and your mother need to get independent financial advice.

NeptunesMoon

cheers again for the replies. turns out she had actually had an interview with mabs before but by the sound of it, they gave her f'all advice. now she seems to have changed her mind on wanting to get lodgers in again

there's a lot of good suggestions here to mill over anyway