Equity release or remortgage?

barry.kel

My 78 year old mother is proposing to release some equity from her house to gift me for a deposit on a new build. I will be taking on the repayments and my question relates to the terms of equity release. The house is mortgage free and she is willing to release €30000-€40000 whichever is required. My question is, are lending institutions willing to lend this money to a 78 year old with myself as guarantor and how long would they loan for? Many thanks.

PokeHerKing

I'm going to say no chance but no harm in flying the kite as I'm not 100% sure.

Jim2007

Extremely unliked and it also unlikely that you'll get a mortgage based on that logic either. You are expected to have the deposit, not borrowed it, gone guarantor and assumed the payments for it.

No financial institution is going to hand over a large amount of money without investigating your circumstances - you are basically proposing a 100% mortgage. Suddenly having 30k - 40k appear in your accounts is not going to fly either you can expect there will be MLA questions to answerl. Which means you well need to disclose the circumstances of how it came to be.

G_R

https://www.boards.ie/discussion/2058207939/equity-release-or-remortgage

No chance for 2 reasons I'm afraid.

1. You will essentially have a 100% mortgage, which is a no no nowadays.

2. No bank is going to allow your mam to release equity at her age (and I would be very surprised if any would release for the purpose proposed at any age, but I don't know all banks policies)

AnRothar

There are institutions that deal with this kind of financing.

What I know about them is simply based on typing into a search engine. So basically nothing.

I suggest that your mother get professional advice tailored to HER circumstances.

While parents may wish to assist their adult children they also need to be mindful of THEIR circumstances, both now and into the future.

dotsman

Afraid this is unlikely to work for a variety of reasons. Certainly, I can't see any bank facilitating the equity release.

• Equity release is rare nowadays. Banks got burned in the '08, so only consider it in exceptional circumstances.
• Your mother is far too old for banks to lend money to. In most cases, banks expect debts to be paid off before retiring and anticipate still being alive by the end of the term.
• As far as the bank is concerned, the repayments would need to come from your mother and not you.

So that pretty much rules out banks. There are small specialist lenders you could try talk to (google will help). However, very little would be known about them from a reputation perspective, and would likely be very expensive, and possibly conditions not applicable/desirable to you. For example, are you the sole child? the equity release would possibly greatly reduce/eliminate any inheritance you mother intends to leave behind.

But, even if you were able to find the specialist lender that's willing to do the equity release, under your proposal you would be taking on debt of 30-40K before applying for a mortgage. Afraid banks wouldn't touch you with a barge-pole with that debt already hanging around you neck. It would absolutely need to be a gift (considered an advance on your inheritance).

Browney7

Equity release is restarting again in Ireland - I'll let you do your own research on that one relating to the providers. The rates of interest are typically quite high (5% p.a. fixed) and the loan is secured against the property. The loan increases each year at the rate of interest. Upon transitioning to long term care or on death, the loan balance is repayable. You can voluntarily repay the loan early. You'd need to consider future care needs for your mother and how any loan and gift interacts with Fair deal etc.

Economically, equity release is a bad deal for the loanee due to the high cost and downsizing is often the most economically optimal outcome but understandably people are often reluctant to leave the family home.

AnRothar

https://www.ccpc.ie/consumers/money/mortgages/equity-release/

here is a link to the consumer protection commission page on equity release.

As browney7 points out the indicative figures can be eye watering.

your mum needs advice before she goes down this road.