Seniors Money

Khannie

Slightly OT, but I think the audience here will mostly have older parents themselves (and therefore experience).

Have anybodys parent / parents used this service or a similar one? My mum's somewhat considering it. She has no mortgage and her house is worth about 500K (give or take 20K). The only other real option she has to release equity, at least that I can see, is to downsize, but there's the (large) cost of stamp duty there.

The figures themselves aren't too bad at all. They charge about 2% above the going rate for mortgages BUT they have things like "random house inspections" and such which she and I are both wary of.

PaulyB63

Providing she's happy to wipe out the lions share of the value of her home over the "repayment" period then by all means.

These schemes are fraught with danger because the equity realeased must be realised by the bank at some stage. ie. when she passes on. Generally, the entire house is required to service the interest on a mortage that has had no repayments made to it.

This is very generalistic but you can go to the IFSRA website for more details.

Hope this helps.

silverharp

Those kind of schemes are ok for people with no direct family but they are expensive. My mum traded down from a house to an apartment in the same area and she has no regrets, cheaper to run etc. the stamp duty is a bugger but maybe your mother could look at a new scheme or even consider renting depending on her age.

Khannie

silverharp wrote:

My mum traded down from a house to an apartment in the same area and she has no regrets, cheaper to run etc.

Good to know. Thanks.

silverharp wrote:

or even consider renting depending on her age.

Oh yeah, that was the other option. She could rent out her own house, then rent a smaller house / apt. Forgot about that.

PaulyB63 wrote:

Generally, the entire house is required to service the interest on a mortage that has had no repayments made to it.

:eek: Have you heard of instances where people get screwed like that? I was thinking that (over time) the house would gain in value at approximately the same rate as the interest (6.4% iirc) meaning it would be a constant percentage of the overall value of the house that needs to be paid back.

There are only 3 "children" (at 31, I'm the youngest by 14 years), and she's been explicit that everything gets divided 3 ways in her will, so I'm sure we'd be selling the house anyway. Luckily, we all own our own houses, so we're not hanging on for our inheritance or anything.

iguana

I've no experience of equity releases, but most newspaper articles I've read about advise against. And it certainly seems risky in a market where prices are falling, as they now are in Ireland. I'd suggest asking in the accomodation/property forum, or maybe in economics.

Khannie

Ok. Thanks Iguana. That seems perfectly rational alright.