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Can i use property bequeathed as security on a loan / mortgage?

  • 20-05-2009 2:31pm
    #1
    maxximus
    Registered Users, Registered Users 2 Posts: 115 ✭✭


    I am new here so not sure if i am even on the right page. I read somewhere lately that it is possible to do this . I.E. My parents have willed their principal private residence to me ( neither deceased ) .

    Is it possible for me to use the value of this property for the purpose of securing a mortgage ?

    Could I for instance take out a long term loan secured against the property and thus reduce the actual amount of the mortgage i apply for ?

    Any help greatly appreciated on this matter , T.I.A.


Comments

  • #2
    egan2020
    Registered Users, Registered Users 2 Posts: 567 ✭✭✭egan2020


    No you cannot take out a mortgage against the property. Firstly, you cannot mortgage a property that you do not own. Secondly, your parents are entitled to change their minds at any time about bequeathing the property to you.


  • #3
    dats_right
    Registered Users, Registered Users 2 Posts: 1,169 ✭✭✭dats_right


    The only way you can use a property as security for a loan is if you actually own it. On the face of it, your only option here is to ask your parents to 'voluntarily' transfer the property to you now, subject to a right of residence being reserved in their favour for their life time. This means that you would own the property but that they would also legally be entitled to reside in the premises until they pass away.

    But even if you can get your parents to agree to doing this, the bank would require them to sign a Deed of Postponement, thereby giving the bank's mortgage first priority over their right of residence, meaning that the bank could and would eject them if you failed to meet the repayments. To be fair there would be absolutely nothing in this type of arrangement for your parents, other than assisting you, and even then no matter how trustworthy and dependable you are they would be taking an enormous risk in the sense that they could be made homeless if you didn't or couldn't meet the repayments.


  • #4
    Victor
    Registered Users, Registered Users 2 Posts: 78,580 ✭✭✭✭Victor


    From the bank's point of view, you can't rely on the house as an inheritance. What if there is no insurance and it burns down? What if your father dies and your mother takes on a toyboy or three?

    You could get your parents to go guarantor, although that doesn't change the loan amount.

    "Could I for instance take out a long term loan secured against the property and thus reduce the actual amount of the mortgage i apply for ?" - with this, you end up with two mortgages, which are likely to cost more.


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