Should we take out a “life loan” on the value of our property to pay for the modernization of our home?

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My husband and I are 70 years old and have lived in the same house all of our lives. It needs a lot of money to improve it because it was built before our marriage.

We estimate the amount needed to be around € 40,000 but we don’t have the money for it. We also cannot get a loan because we are both on the old age pension.

We have heard with interest about a new type of loan being made available to people like us that has no repayment. How would we qualify for this and is it a good idea?

The loan you are referring to is called a release of equity or a “life loan”.

These are again available in the Irish market after suffering bad press in the past as they have proven to be a very expensive method of accessing credit and have not been sold for many years.

Unlike a normal mortgage (and it is a mortgage because it is secured by your home), life loans are not repaid by the borrower. Instead, the annual interest (5.5pc, which is similar to that offered to rental investors) is added to the principal and accrued as long as the owner remains in the house, and is only repaid after their death or sale. . the property.

I know of one provider (www.spryfinance.ie), which is part of the Seniors Money group, but others can be expected to enter the market as the Central Bank restrictions on this type of loans have been relaxed.

It offers between 15 and 40pc of the value of the house, depending on your age, which must be at least 60 years old. The older you are, the more you are entitled to a loan, for obvious reasons! There is no subscription – your income does not matter; all that matters is the value of your home. The minimum is € 250,000 in Dublin and € 175,000 elsewhere. The minimum loan is € 20,000.

Basically, if you borrowed, say $ 40,000 at age 70, you would expect to owe $ 80,000 at age 83, although you can partially repay the loan if you wish under certain circumstances. There is an installation fee of € 1,500.

Honestly, I can’t say if this is for you or not. I am generally not a fan. The advantage is that you get the money now without having to pay for it; the downside is that it is “expensive” money because you don’t know how much the loan will be, and it will reduce any inheritance you may wish to leave to your family.

At the very least, I would get some good independent legal advice before I commit, and involve your family in the decision, although the company’s website has plenty of clear information on the product itself.

A few years ago, my wife inherited her house from her brother, while the will stated that her sister had the right to live there all her life. There is no communication between my wife and her sister.

This sister is old and in poor health, and the house is falling apart. We are retired ourselves and face huge costs and, if she dies, a tax bill.

What are our rights now and if she dies, what costs do we face? We have paid for home insurance all these years.

It’s difficult to answer because it’s unclear exactly how the entire will was written, says Marian Ryan of Taxback.com, whom I asked for advice.

Despite what you say, it is normal that a clause is inserted (a) to leave the house of the wife’s sister for the rest of her life, and then it reverts to your wife. Or (b) It is left to your wife entirely after the death of her sister.

“In the first scenario, your wife inherits the house when her brother dies, but the benefit is limited by her sister’s right to reside in the house. The right of residence is assessed by Revenue using a rule of thumb equal to 10pc of the value of the house.

“Both sisters are liable to CAT upon the death of their brother for the market value of the property. When your wife’s sister dies, your wife will receive an additional inheritance as the sister’s rights come to an end ”.

In the second scenario, your wife’s sister receives a benefit from the will and upon her death, your wife will receive her benefit (the house) from her brother’s estate. The sister will be subject to the acquisition tax on the capital (CAT) on the date of her brother’s death (reduced by certain allowances). Upon the death of the sister, your wife will then be subject to CAT at the market value of the property. The group B tax exemption threshold will apply to both sisters (€ 32,500).

It doesn’t matter how much home insurance you pay because it doesn’t affect your rights.

I know this is confusing, so my advice is to consult with a lawyer who will review the will and advise you specifically on how to proceed.re.

Email your questions to siryan@independent.ie

Ryan’s review

It’s amazing how quickly behemoths like banks can spin when they sense a little competition in the air.
Just a few years ago, a fixed mortgage for more than a few years was unthinkable. Then someone decided there was a market for a 10 year solution. There was a bit of a mockery, but lo and behold, it turned out that some clients at least liked the safety and comfort cover of the known knowns, especially with interest rates staying so low – the only way was surely to increase?
Today, despite all the mockery, every consumer retailer offers a 10-year fixed rate.
And now, only in the last few months, the non-bank lender, Finance Ireland, has rocked a 20-year fixed rate.
Twenty years? No one will ever want this!
Well, I wouldn’t be too sure.
So-called market commentators have crammed in to tell us that it doesn’t make a whole lot of sense – after all, life often gets in the way of long-term plans, and lengthy repairs result in pretty prohibitive break-down costs – people are nervous; first-time buyers are everyone’s nervousness.
Pinned to their collars in the true belief that they won’t go anywhere for a long time, this might sound like a good idea. So far no one else has come out, but it’s probably only a matter of time – far less than two decades, I bet.


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