Remortgage for a 72 y old

Steve012

Hey folks, I was wondering do banks still do remortgages for someone who owns their house out right, and looking to free up say a quarter of its worth?
The person is retired, has a private pension that runs out in 5 years time.

The person has been a long time customer of Bank of Ireland, 38 years a customer.

Any advice greatly appreciated.

peteb2

And how would they repay the mortgage? I think the live in your house till you die and get the equity out ahead schemes are long gone

Steve012

peteb2 wrote: »

And how would they repay the mortgage? I think the live in your house till you die and get the equity out ahead schemes are long gone

Cheers Pete, If they had the ability to pay it back, through their own pension and add money into the private pension to lengthen the years of pension. Plus entering some of the remortgage into a separate accountant to cover it it. !?!

Thanks for your previous reply.

kavanada

Steve012:-

I'd highly recommend not doing what you're proposing (or friend). Taking money/equity out of the fully paid off house to put back into a pension fund isn't a sound idea.

The bank will always get a greater return on their share of the equity released than the homeowner and at 72 years of age, your friend won't be able to build up any decent fund with that equity release in the next 5 years.
Basically, what they put in is what they'd get out. (You'd have to think of fund management costs, stock market issues, lack of compound interest, etc.)

From the info you've given, the best bet would be to simply live a fairly frugal life (without going without heat etc., needless to say) and get the pension to stretch into the future as much as possible.

They are 72. Males at that age now are more or less expected to die shortly going by industry standards.

Do you know if it's a case of your friend having zero expected savings once at 77 and no further money coming in? Do they have the state pension?

If they are stuck for cash from 77 onwards, selling the house then for a smaller place would be more financially advantageous to them. However, we then enter the realms of what'll the property market be like then, travel costs from the new place wherever that is, loneliness.

As you can see, there's no right answer. Just one slightly better depending on the moment in time.

But taking out a portion of your homes worth simply for cash reasons wouldn't be great, to be honest.

Good luck.

phormium

There is no bank or financial institution doing what you want, those equity release schemes died out with the tiger, they weren't a great plan anyway but were the only option for some people.

No bank is going to give a mortgage to a 72 yr old regardless of the house value, ability to repay is the number one criteria and as the older you are the shorter the term that makes affordability impossible especially as he is already past the age mortgages end by which for most banks is 65 and the odd one goes up to 70.

coylemj

kavanada wrote: »

They are 72. Males at that age now are more or less expected to die shortly going by industry standards.

That statement might be correct if the person was in their late 80s, an Irishman now aged 72 would be expected to live for another 10 years or more.

Left expectancy when that person was born may have been 72 but having achieved the age and given the improvements over the years in nutrition, healthcare and people generally looking after themselves, someone who is now past the age of 65 has a reasonable expectation of making it to their 80s.

The only way you can 'free up equity' in a house is to sell it and buy a house costing less. Any other solution involves taking on a debt which has the capability to swallow up all of your equity if you live long enough.

Mrs OBumble

kavanada wrote: »

Steve012:-

I'd highly recommend not doing what you're proposing (or friend). Taking money/equity out of the fully paid off house to put back into a pension fund isn't a sound idea.

The bank will always get a greater return on their share of the equity released than the homeowner and at 72 years of age, your friend won't be able to build up any decent fund with that equity release in the next 5 years.
Basically, what they put in is what they'd get out. (You'd have to think of fund management costs, stock market issues, lack of compound interest, etc.)

From the info you've given, the best bet would be to simply live a fairly frugal life (without going without heat etc., needless to say) and get the pension to stretch into the future as much as possible.

I would absolutely not recommend going without heat! Very poor advice for an older person especially.

Presumably they have state pension. Worse case, they can live off this (if the house is cheap / in an area with low demand). Or if the house would fetch a good price, sell and buy in a cheaper area, and plan for the released capital to last for a good while yet.

Reverse equity mortgages are a bad idea if you want to leave money to descendants. But if there are none, or if the expectation in your family is that there are no inheritances, then they're not necessarily such a bad idea. (That siad, I don't know if anyone is offering them.)

A session with MABS or a financial advisor may be a good idea.

AlmightyCushion

Mrs OBumble wrote: »

I would absolutely not recommend going without heat! Very poor advice for an older person especially.

Presumably they have state pension. Worse case, they can live off this (if the house is cheap / in an area with low demand). Or if the house would fetch a good price, sell and buy in a cheaper area, and plan for the released capital to last for a good while yet.

Reverse equity mortgages are a bad idea if you want to leave money to descendants. But if there are none, or if the expectation in your family is that there are no inheritances, then they're not necessarily such a bad idea. (That siad, I don't know if anyone is offering them.)

A session with MABS or a financial advisor may be a good idea.

Kavanada said without going without heat so you are both in agreement.

kavanada

Ok, I didn't actually say to go without heat. It was the opposite, to be fair, if you re-read my original post.

Regarding life expectancy, I won't argue over 5 years at the age of 77-82.

Ones individual health will play a more relevant role anyway. OP, only you know how fit/sick your friend is.

The point about dependants and inheritance is another movable parameter and an important thing to consider. If the friend is a never-married, childless person, then selling up isn't that great an issue.

However, as everyone here has mentioned, those equity-release schemes are now gone anyway so it's either a full sell up or just sit tight in your own home.

kavanada

^^^ As AlmightyCushion said.

Not to worry anyway.

Mrs OBumble

Another option just occurred to me:

Some of the voluntary housing associations (eg Cluid) have schemes whereby older people who cannot afford to maintain their homes can sell the home, and then the association buys a house (either the older person's current one, or another more suitable) and gives them a lifetime tenancy. (Subject to rent being paid and no anti-social behaviour, of course).

Might be a better option than selling and moving to a totally new town at 72, and it removes the risks of being kicked out of your rental because the LL wants to sell.

Steve012

Mrs OBumble wrote: »

Another option just occurred to me:

Some of the voluntary housing associations (eg Cluid) have schemes whereby older people who cannot afford to maintain their homes can sell the home, and then the association buys a house (either the older person's current one, or another more suitable) and gives them a lifetime tenancy. (Subject to rent being paid and no anti-social behaviour, of course).

Might be a better option than selling and moving to a totally new town at 72, and it removes the risks of being kicked out of your rental because the LL wants to sell.

Thanks Mrs OBumble, never heard of that!