Releasing equity confusion

rekcaks

My home is in positive equity (mortgage is 100k and how was valued for mortgage purposes at 150k 1 year ago). I want to release equity on my home to build a garage and do some general improvements to my street, kerbing and tarring.

My mortgage is over 16 years and I want to increase that to 20 years but keep the repayment the same as I’m currently paying.

I don’t fully understand how equity release works. From using google I’m getting the idea that the bank will own a percentage of my home until the day it’s sold where they will receive the percentage of the sale?

Surely if I pay another 4 years on my mortgage the bank won’t own a percentage of my home?

Any help on this would be great

Trish56

OP what you are looking for is a top up on your existing mortgage so you need to contact your existing lender. They all differ as to how much they will lend however the following is based on a 85% loan to value.

Current value of property = €150,000
85% Loan to Value = €127,500
Equity available = € 22,500

Your lender will advise you if you qualify and if they will allow you to extend the overall term to 20 years etc.
Best of luck.

rekcaks wrote: »

My home is in positive equity (mortgage is 100k and how was valued for mortgage purposes at 150k 1 year ago). I want to release equity on my home to build a garage and do some general improvements to my street, kerbing and tarring.

My mortgage is over 16 years and I want to increase that to 20 years but keep the repayment the same as I’m currently paying.

I don’t fully understand how equity release works. From using google I’m getting the idea that the bank will own a percentage of my home until the day it’s sold where they will receive the percentage of the sale?

Surely if I pay another 4 years on my mortgage the bank won’t own a percentage of my home?

Any help on this would be great

rekcaks

Trish56 wrote: »

OP what you are looking for is a top up on your existing mortgage so you need to contact your existing lender. They all differ as to how much they will lend however the following is based on a 85% loan to value.

Current value of property = €150,000
85% Loan to Value = €127,500
Equity available = € 22,500

Your lender will advise you if you qualify and if they will allow you to extend the overall term to 20 years etc.
Best of luck.

Hi Trish, Thanks for your advice. I currently owe around €91k on my mortgage after 1.5 years or so.

I have been in touch with my lender(B.O.I) and they keep mentioning equity release.Even though they have also mentioned that the my home is currently in positive equity. I have been send out a mortgage application to fill out so i will have a look at that soon.

Trish56

Hi Rekcaks,
Apologies my figures were not 100% correct there.
85% loan to value would be €127,500
Less Mortgage outstanding € 91,000
You should be able to borrow up to 36.5k.

Yes it is called equity release but I think most people call it a top op mortgage.

rekcaks wrote: »

Hi Trish, Thanks for your advice. I currently owe around €91k on my mortgage after 1.5 years or so.

I have been in touch with my lender(B.O.I) and they keep mentioning equity release.Even though they have also mentioned that the my home is currently in positive equity. I have been send out a mortgage application to fill out so i will have a look at that soon.

coylemj

OP, if you're dealing with BoI and are extending an existing mortgage then you're in safe territory but for a period during the boom years there was a financial package on offer whereby elderly people who wanted to leverage the value of their home without selling it outright were offered 'equity release' packages. This involved selling part of the house for a lump sum but they were allowed to live in the house until both of them died or moved out permanently (typically to a nursing home). The finance house then took a % of the proceeds of the sale when the house was sold.

A variation on this type of deal was where the 'equity release' package involved borrowing an amount of money but there was no monthly payment, instead interest accumulated each month and if the owners lived long enough, the company who extended the loan ended up owning the entire house.

Before this type of package came on the market, those of use with mortgages over 10 years old were every day getting flyers from our bank encouraging us to 'release the equity in your home' to borrow money for cars, holidays etc. These would have involved topping up the mortgage in order to borrow money at mortgage interest rates, precisely what you considering doing.

So you can see where the confusion has arisen and why Google is giving you the information you've seen. If I was you I would avoid the use of the term 'equity release'. All you are proposing to do is to extend an existing mortgage but by the sound of it you are retaining full ownership of your home and the bank will never have an equity share in your home beyond the lien they will have based on the outstanding mortgage.

rekcaks

Trish56 wrote: »

Hi Rekcaks,
Apologies my figures were not 100% correct there.
85% loan to value would be €127,500
Less Mortgage outstanding € 91,000
You should be able to borrow up to 36.5k.

Yes it is called equity release but I think most people call it a top op mortgage.

coylemj wrote: »

OP, if you're dealing with BoI and are extending an existing mortgage then you're in safe territory but for a period during the boom years there was a financial package on offer whereby elderly people who wanted to leverage the value of their home without selling it outright were offered 'equity release' packages. This involved selling part of the house for a lump sum but they were allowed to live in the house until both of them died or moved out permanently (typically to a nursing home). The finance house then took a % of the proceeds of the sale when the house was sold.

A variation on this type of deal was where the 'equity release' package involved borrowing an amount of money but there was no monthly payment, instead interest accumulated each month and if the owners lived long enough, the company who extended the loan ended up owning the entire house.

Before this type of package came on the market, those of use with mortgages over 10 years old were every day getting flyers from our bank encouraging us to 'release the equity in your home' to borrow money for cars, holidays etc. These would have involved topping up the mortgage in order to borrow money at mortgage interest rates, precisely what you considering doing.

So you can see where the confusion has arisen and why Google is giving you the information you've seen. If I was you I would avoid the use of the term 'equity release'. All you are proposing to do is to extend an existing mortgage but by the sound of it you are retaining full ownership of your home and the bank will never have an equity share in your home beyond the lien they will have based on the outstanding mortgage.

Thanks to both of you for clearing up the confusion! I can rest easy knowing that a percentage of my home wont be taken!