Equity release without the straitjacket. Possible?

I was looking to 'release equity' in my PPR (on which there is no mortgage) in order to part-finance an investment elsewhere. I made an in (or is it en)quiry to one of the mainstream banks about needing €30-40K for a small extension and some renovation works .. and was met with a whole programme of invoices paid as the building progressed and was signed off on..

Is there any way to get a straightforward (i.e. cash in hand without all the limitations) equity release anymore?

No, they will only give it for works on your home and will look for proof.

The banks are trying not to have a repeat of the mess that people got themselves into not too long ago by releasing equity on their homes to buy big cars and apartments in Bulgaria.


Steven
www.bluewaterfp.ie

Thanks Steven,

Question: I can't see the difference between buying a big kitchen and a big car - either the bank is adequately covered in it's lending a) by your ability to pay b) the value of the property decking the loan ... or it's not.

Why would it much matter what you spend it on?

What the loan is spent on does matter, as home improvements generally add value to the asset against which the loan is drawn, therefore reducing the chance of a negative position. A new car, or investment elsewhere won't increase the value of the underlying asset.

iano086 said:

Thanks Steven,

Question: I can't see the difference between buying a big kitchen and a big car - either the bank is adequately covered in it's lending a) by your ability to pay b) the value of the property decking the loan ... or it's not.

Why would it much matter what you spend it on?

Click to expand...

They won't give you the money to buy a kitchen either, unless you are extending your house and putting the kitchen in it. They will tell you to take out a personal loan.

The reason they don't want to go down the equity release route again is people were remortgaging their homes to pay for all kinds of things, holidays, cars, apartments in Bulgaria. As house prices went up, equity was released and people spent on the never never. Then prices collapsed and the banks were exposed. Not only was the house worth less than the initial mortgage, but now there was all this extra debt on it too.

Releasing equity on homes has got a lot of people in a lot of financial trouble. We need to learn from these things.

Steven
www.bluewaterfp.ie