Senior’s Equity Release Ireland

You may have seen the ad’s on TV Portrait of Pascal Advice First Financial services letterkenny seniors equity release(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.

LIFETIME MORTGAGES 

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?

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: 

    • Age 
    • Gender
    • 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. 

                                                                                OR 

    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. 

    Second conversation  

    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. 

    Paperwork 

    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. 

    Solicitor: 

    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.  

    If Unsure

    Why not take advantage of our Protection Review, this review will give you a professional assessment on how well your existing arrangements meet your needs and may even save you money.

    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?

    A Lifetime Loan is a mortgage loan secured against your home. You do not sell a share of your home. You borrow a cash sum using your house as security. You can use this money as you wish. This type of loan is designed to last for the rest of your life. There are no regular repayments to be made. It becomes repayable if you sell your home or after you die or permanently cease to reside in your home. 

    What is a home reversion plan?

    A Home Reversion Plan allows you to access all or part of the value of your property while retaining the right to remain in your property for the rest of your life. With a Home Reversion product, the provider will purchase all or part of your house taking into account your age and will provide you with a cash lump sum and a lifetime lease, guaranteeing you the right to stay in your property for the rest of your life. There is no day-to-day interference and no restrictions on treating the house exactly as before as a private home to live in freely 

    How do I find out if home reversion equity release is suitable for me?

    You can try out this quick calculator or contact us directly by email or phone, but in order to understand our plan in detail, your next step is to receive independent financial advice from a Qualified Financial Advisor (QFA). Note: Home Plus is not permitted to offer advice on their plans 

    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”?

    A full market 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 fact 

    How long will it take to receive my money?

    We have found through our experience this is influenced greatly by your choice of solicitor. Subject to you appointing a solicitor who is experienced in Home Reversion Plans it is possible to receive your money within 6-8 weeks of application. 

    What can I use the funds for?

    The funds are yours to do with as you wish 

    What happens if I still have a mortgage?

    If you have a current mortgage or any legal charge on the property this would need to be paid off at the beginning of your home reversion plan 

    Will I have to pay tax on the money raised?

    Capital Gains tax (CGT) is not charged on selling a share of your principal private residence in most circumstances, but you should procure independent tax advice if you are unsure of your tax standing 

    Am I responsible for any charges relating to my Home Reversion Plan?

    There are some upfront costs which are laid out in detail as part of your full quotation. These may include the cost of your independent solicitor and property valuation amongst other items

    Do I need to use a Qualified Financial Advisor?

    Yes, it is essential that you consult a Qualified Financial Advisor (QFA) before applying for a Home Reversion Plan. It is important to consider all the options on the market and consider the benefits and grants which may be available.

    Do I have to instruct a solicitor?

    Yes. You must take independent legal advice when taking out a home reversion plan and engage a solicitor on your behalf to complete the plan.

    Can I choose my own solicitor?

    Yes. You can choose your own solicitor to represent you when taking out a home reversion plan. If you don’t have a solicitor, we can provide you with a panel of solicitors which you can chose from who are trained and experienced in Home Reversion.

    Will I still own my property?

    With a home reversion plan you are choosing to sell a part of your home, while retaining a remaining share for the remaining years of the plan, subject to complying with the terms and conditions. The Title Deeds are amended to reflect the plan and your share is held by Home plus as trustee. This is then registered with Property Registration Authority.

    What happens should I need to move into long term permanent care?

    If you need to move into permanent long-term care, home plus will need written confirmation from you or your personal representative. They will then arrange for your property to be placed on the market for sale. If you entered into the plan with a spouse, and only one of you needs to move into long term care, the other plan holder can remain in the home for the rest of their lifetime, until they need to move into long term care, or they decide to sell the home. If there is a change in your circumstances by virtue of your partner moving into long term care an amendment may be possible to your plan. It is important that you let us know to ensure that we can address the new circumstances.

    What happens to my plan after I die?

    If you entered into the plan with a spouse or partner, upon the death of the first plan holder, Home Plus ask that they let them know and send them a copy of the death certificate, so they can update their records. Upon death of the “last homeowner” the executors of your estate need to notify Home Plus and provide them with details of the solicitor dealing with the Estate. They will arrange for the property to be valued and placed on the open market. Once a sale is completed the proceeds will be split in accordance with the percentages owned between Home Plus Group and the original homeowner.

    If I choose a plan with monthly payments, will they change over time?

    Generally monthly payments are adjusted in line with CPI (inflation) and can be stopped at a certain age were agreed at the offset of your plan. Your Qualified Financial Advisor will advise you of the different options and the benefits and obligations attached to each one.

    If I choose monthly payments, what happens if I can’t afford them?

    This shouldn’t be the case as we thoroughly evaluate your affordability prior to the start of a plan. Also, should your circumstances change during the agreement, and you are having difficulties making your monthly payment you should contact us without delay. We will work together with you to find a solution. However, you should be aware that, in the worst case, you may be at risk of diluting or losing your share in the home for non-payment of monies due

    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?

    Yes. Please note Home Plus has a standard valuation form and must be completed by a suitably accredited individual.

    Do I need to consult my family before proceeding?

    This is a personal and individual matter for each homeowner. We recommend you discuss your plans with your family before making an application. Your qualified financial advisor may ask that some of your family members attend the meeting with you.

    What happens if my partner dies, and I can no longer afford the agreed monthly payment?

    As indicated previously, please notify us of any changes in your circumstances, and we will discuss and address your change of circumstances with you. Home Plus will endeavour to adapt your plan to your new circumstances.

    Can I leave some inheritance?

    Yes. At the outset of all deals, you retain a share in your home which will form part of your estate upon death.

    Can I still keep the deeds to my house?

    The Amended Title Deeds, with relevant shares will be registered with the Property Registration Authority. These deeds will be retained in safe storage by an independent third party.

    Can I end the plan early and buy back your share of the property?

    It is possible for you to buy back Home Plus Group’s share of the property at a later date. If you think you may wish to buy your property back in the future, it is important you discuss this with your advisor.

    Why do I need to complete and return the Home Plus “Home Check” Form annually?

    To ensure you are observing the terms and conditions of the plan, each year we need you to confirm that you are still living at the property (and no additional third parties, without consent) and that you have building insurance and maintained the quality of your home. This is also an opportunity to update your legal advisors and next of kin details should they change.

    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?

    As joint owners of the property it is important to ensure the appropriate buildings insurance cover is in place with Home Plus noted as a beneficiary.

    What if a relative or carer wants to live with me?

    We allow a relative or carer to move into the property. You should notify us before they move into your property and they will be required to sign a Letter of No-Tenancy, subject to an undertaking that they will vacate the property within 1 month of your death or moving into care.

    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?

    You can apply to us to release further equity from your property at any time.

    What happens if I miss a monthly payment?

    Where a direct debit payment is returned as unpaid, we will contact you to make arrangements to collect the payment. We will consider other methods of payment, such as debit or credit card, however additional charges may apply. A charge may be levied for unpaid DD in line with the schedule of charges. If payment arrears persist, we will endeavour to make contact to understand your circumstances and find a suitable solution. If no action is taken on your side however, we may have no choice other than to instruct our solicitors to deal with any claims. In worst case, you may be at risk of diluting or losing the share of your home.

    Can I change the date of my direct debit?

    Yes, please note, there may be an administrative fee.

    Is my pension affected?

    Possibly, but you should check all this information with your qualified financial advisor and your local welfare officer.

    Does my plan change if my property rises in value?

    Your plan does not change based on a rise in property value. You will of course benefit in the rise in property prices for your share.

    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.

    WARNING
    Purchasing this product may negatively impact on your ability to fund future needs.

    WARNING
    The money you receive may be much less than the actual market value of the share in your home.

    WARNING
    Releasing equity from your home may impact your ability to claim means tested social welfare benefits.

    WARNING
    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.

    Call us today in Letterkenny: 074 910 3938

    Advice First | Letterkenny | Donegal