Senior’s Equity Release Ireland
You may have seen the ad’s on TV (UK channels) where people of a certain age can release equity from their home to help fund their retirement or (as the ad’s say) re-open the bank of Mum and Dad.
This option has been available in the UK but until recently was not available in Ireland.
But it is now, with 2 providers coming into the Irish Market.
Before deciding to take this option, it is very important that you understand the products available, and it is very important that you seek advice from a Trusted Qualified Financial Advisor.
So, there are two types of products available in Ireland
- Lifetime mortgage
- Home Reversion
Home Reversion Plans versus Lifetime Mortgages
At a glance
- Home reversion plans and lifetime mortgages both allow you to release the cash locked in your home
- Home reversion plans is where you sell a share of your house, whereas a lifetime mortgage is a loan secured against your property
- Both types of equity release allow you to stay in your own home until you die or move into permanent care.
A lifetime mortgage is a type of equity release. You borrow a set amount of money and use your property as security. Unlike a standard mortgage, there is no need to make monthly payments towards the loan as you can choose to let the interest roll up over time. This means the interest is added to your original loan and to any interest already accrued and this means your debt will increase over time. When you die or go into long term care the loan needs to be repaid including the interest. This is usually done through the sale of the property.
HOME REVERSION PLANS
Home reversion plans allow you to sell your property or a share of your property to an equity release provider. You continue to live in the property but must agree to insure and maintain it. You will receive a percentage of the property’s value you are selling. The amount you receive will be less than the market value of the share of the property sold.
We are going to look at the home reversion options here. We will look at the lifetime mortgage in about blog.
Money Fact Tip
This type of plan has proven very controversial in the Irish Market in the past. We advise involving your family in this discussion. We also advise seeking advice from a Trusted Financial Advisor.
What is Home Reversion Ireland?
A home reversion Plan is where you agree to sell a share of your home in return for a set price. You do not borrow against the value of their home but instead sells a share of you home. The home reversion company will receive the relevant share of the sale of the home when you move out of their home or die.
A Home Reversion Plan enables you to generate a cash lump sum by selling a percentage share (up to 95%, but typically at most 70%) of your home, whilst allowing you to remain in your property, typically there will be a monthly payment depending on how much of your home you wish to sell and how large a lump sum you wish to raise.
You may have built up considerable equity in your bricks and mortar over the years. The traditional way to access this equity is to sell up and downsize, however over 55’s can now release cash from their home using a home reversion plan while staying in the home they love.
With people now living longer, and pensions not being what they once were, savings are having to stretch much further to last throughout retirement, we can help with this.
STAY IN YOUR HOME
A Home Reversion plan keeps you in the place you’ve called home for the rest of your life or until you enter long term care when the plan ends. The terms under which you can continue to stay in your home are set out in the plan and the residential tenancy agreement which may include a monthly payment which must be maintained for you to remain in the home.
LESS THAN MARKET VALUE
Generally, the amount you receive will be less than open market value as this valuation is based on no one living in the property, i.e., the property is sold vacant. The amount you receive is based on the fact that you continue to live in your home for the rest of your life or until you enter long term care, (subject to the terms and conditions of the plan), and as such the value is adjusted to reflect this and the amount of the monthly payment.
IT’S YOUR PLAN
The plan you choose is tailored around your needs and circumstances. If you need a larger cash lump sum you can elect to make a monthly payment (based on affordability) to increase the lump sum available to you, however you must maintain that monthly payment to remain in the home. If you would like to stop making monthly payments at a given age e.g., 80, 85, 90, then this option is available to you.
CASH REFUND ON EARLY VACANCY
If for any reason you decide to leave your home at an early stage soon after taking out a home reversion plan, an early vacancy rebate may be provided, you will be entitled to a refund coming from a share of net proceeds in the event of a vacancy in the first 5 years.
LEAVE AN INHERITANCE
As part of your plan, the provider takes legal ownership of your home acting, as a trustee, you retain beneficial ownership over a share in your home and this is set out in co-ownership agreement which is a part of the plan documentation. You can leave your share as an inheritance to whoever you wish. You or the people you leave the inheritance too, can repurchase the share you sold to the provider at a later date.
Who is Eligible?
You can put in place a home reversion plan and release the equity locked in your home if:
- You are aged over 55
- You have a property worth more than €120,000
- Your main residence is in the Republic of Ireland
How does it work?
The potential amount you can release is calculated based on:
- Property Value
- The percentage share of the property you’re willing to sell
- Monthly Payment amount (where applicable)
A couple of examples:
A 75-year-old male with a property valued at €300,000.00 can release up to €75,000.00
by simply selling 60% of their property.
A 75-year-old male with a property valued at €300,000.00 can release up to €100,000.00
by selling 70% and paying € 200 monthly.
One of the key features is, you can decide both the amount of your property you’d like to sell and the monthly payment figure you would like to make.
How to Apply?
The process is relatively simple, here are the steps that will be taken.
GET AN INDICATIVE QUOTATION
You can receive an indicative quotation by clicking the following link: Indicative Quotation.
We’re happy to walk you through this if you require further detail or would like us to do another quotation for you.
Email us, or simply give us a call and we’ll be happy to arrange an appointment with one of our advisors as soon as possible.
Discuss with your family
We would suggest, it’s important to discuss your plans with your family as any decisions you make now could affect them later down the line.
RECEIVE INDEPENDENT FINANCIAL ADVICE FROM A QUALIFIED FINANCIAL ADVISOR (QFA)
The plan is plan is not available direct, so you have engaged a Qualified Financial Advisor. Your advisor will help guide you through the application form, advise you on the suitability of a Home Reversion to your circumstances and make you aware of all the documentation required.
Your dedicated advisor will present their recommendation to you in writing, answering any questions along the way. They will also provide you with a personalised report and allow you time to consider their recommendation.
If you decide to go ahead, your advisor will package your application including an independent property valuation, BER certificate, statement of suitability, and send them to the provider.
APPROVAL & SIGNATURES
The Provider: Will review your application and if successful will issue a Letter of Approval. This outlines the approved terms and asks you to confirm if you wish to proceed.
A solicitor of your choosing will provide independent legal advice, this is a requirement of the plan. They will also cover the other legal aspects for you. At this stage you will need to provide their details so the full legal pack can be sent to them.
COMPLETION – FUNDS ADVANCED
Typically, the timeline is around 16 -20 weeks from application to completion.
Why not give us a call and we will be happy to discuss the options available and whether they are suitable for you or not.
Frequently Asked Questions on Home Reversion Plans
What is equity release?
Assuming there is equity in the property, i.e., the value of the property is greater than the mortgage outstanding, it is a financial solution that allows homeowners to raise money from their property as a lump sum.
What is a lifetime loan?
What is a home reversion plan?
How do I find out if home reversion equity release is suitable for me?
How much can I release?
The cash lump sum depends on several factors: your age(s); the current open market value of your property; the share being retained in your home; and a monthly payment (where applicable). For an indication of how much you can release please use this quick calculator
Why don’t I get “full market value”?
How long will it take to receive my money?
What can I use the funds for?
What happens if I still have a mortgage?
Will I have to pay tax on the money raised?
Am I responsible for any charges relating to my Home Reversion Plan?
Do I need to use a Qualified Financial Advisor?
Do I have to instruct a solicitor?
Can I choose my own solicitor?
Will I still own my property?
What happens should I need to move into long term permanent care?
What happens to my plan after I die?
If I choose a plan with monthly payments, will they change over time?
If I choose monthly payments, what happens if I can’t afford them?
Can I move to a different property once I have taken out a plan?
Yes, our plans allow you to move home should you decide to do so in the future. The homeowner can either sell their share at market value to Home Plus or the property may be sold, and the shares divided accordingly per the terms of the agreement. Costs of the sale of the first property, will be split pro-rata by original share. Costs relating to the move to the new property are the Homeowner’s responsibility. If a new reversion plan is undertaken, costs may be absorbed into a new plan.
Can I choose which surveyor values my home?
Do I need to consult my family before proceeding?
What happens if my partner dies, and I can no longer afford the agreed monthly payment?
Can I leave some inheritance?
Can I still keep the deeds to my house?
Can I end the plan early and buy back your share of the property?
Why do I need to complete and return the Home Plus “Home Check” Form annually?
Who is responsible for maintenance and insurance?
As you are living in the home, you remain responsible for the day-to-day maintenance of your property (for example, decorating and repairs) together with the property insurance and all bills and taxes.
What happens if maintenance work or alterations are needed to my home?
It is the homeowner’s responsibility to maintain the property to a reasonable standard. If you require any alterations to your property, you must firstly obtain Home Plus’s written consent, which will not be unreasonably withheld. Any request must be sent in writing with full details of the works involved prior to them being undertaken. Home Plus will then decide and notify you in writing where they consent to such works. If you are in any doubt about the requirements here, then feel free to call or email Home Plus and one of their team will be happy to help you. Please note: Minor decoration or repainting does not require a request. Only when there are material alterations being made, do they require our consent.
I pay for my building’s insurance, why do you require a copy each year?
What if a relative or carer wants to live with me?
Can I rent a Room?
You can rent a room in your property if you wish. We just need to ensure your tenant signs our letter of No-Tenancy.
How do I release more money from my home?
What happens if I miss a monthly payment?
Can I change the date of my direct debit?
Is my pension affected?
Does my plan change if my property rises in value?
Does my plan change if my property decreases in value?
Your plan does not change based on a fall in property value. We share any decrease in value based on our respective share of the property.
Purchasing this product may negatively impact on your ability to fund future needs.
The money you receive may be much less than the actual market value of the share in your home.
Releasing equity from your home may impact your ability to claim means tested social welfare benefits.
Failure to insure your home and/or make monthly payments in line with your home reversion agreement may result in the dilution of your share in the home and you may be at risk of losing your home.