Bridging loan on behalf of elderly parent

[Tryingtoplan]

I’m wondering if anyone has gone through a similar situation and can provide some guidance, or if anyone has heard of similar.

My father (89) is widowered and is now looking to downsize. Has about €200k savings available and a main residence worth about €600k. He is looking at properties circa €400k and what I’m wondering is the following.

His only current income is state pension and civil service pension so with his age and his income will be unable to get a bridging loan for the circa €200k required to add to his savings to purchase the property.

He doesn’t want to sell his current house until he has secured a new one and certainly does not want to rent during the interim period.

So I see two possible scenarios (but not sure if either are viable options):

Option 1:

What I’m wondering is whether I can apply for a bridging loan (to help him with the purchase) but based on my income and his equity in his existing house?

Option 2:

Apply for the bridging loan based on my own ppr house (value €500k, no mortgage) and purchase the trading down property for him (leveraging loan and his savings) and repay the bridging loan when he sells his existing home?

Any and all advice/ guidance/ pitfalls would be really appreciated from this group of experts

 

[DannyBoyD]

He's unlikely to even have his offer accepted on house #2 until he is at least sale agreed on house #1.

I haven't heard of bridging loans being available for years.

 

[Brendan Burgess]

His best option will be a Lifetime Loan from Spry Finance

Key Post - Spry Finance Lifetime Loans

I find the Spry Finance website complicated so this is my summary of it. If you are at least 60, you can take out a Lifetime Loan from Spry Finance. There are no other providers in the Irish market which is a pity. You do not have to make any repayments, they will roll up the interest. The...

www.askaboutmoney.com

Normally*, they would lend 40% of the value of the property to someone aged over 85, so €240k.

He then buys his new house and sells the old house.

He will have to pay an early repayment penalty of up to 2%, but that would seem worth it under the circumstances.

* I say normally, because they might not want to lend if the loan is going to be repaid very soon.

 

[Brendan Burgess]

Option 2

Your father gifts you €80k.
You take out a mortgage and buy the house in your name. This would be a buy to let mortgage.
Better still, if you have €80k, you can simply buy the new house without a gift from him.

Your father sells his own home.
He buys the house from you.
You repay the mortgage.

You will have one extra set of legal fees and 1% stamp duty.

Brendan

 

[CoolHand]

Spry Finance would be an option. Based on his age he could borrow 40% of the value of his house =€240K and with his savings of €200k, that would get him to the level he needs.

Their website states that if he sells the house, there is no early repayment charge or also after his 88th Birthday there is no charge.

 

[Brendan Burgess]

Their website states that if he sells the house, there is no early repayment charge or also after his 88th Birthday there is no charge.

Good point. Which probably means that they won't give him the money as it would be totally unprofitable for them.

 

[Fortune]

10 years ago I was told by a solicitor that bridging loans hadn't been a thing for years.

 

[Tryingtoplan]

Thanks all, I’ll reach out to Spry and see if we can figure something out as that seems like a good option.

For those saying that bridging loans are no more, ICS mortgages re-introduced them at the end of 2024 as far as I am aware

Thanks again for all the replies

 

[ClubMan]

ICS mortgages re-introduced them at the end of 2024 as far as I am aware

ICS revives bridging loans ‘to ease bottleneck’ in second-hand home market

Short-term property loans essentially disappeared in the wake of the property crash

www.irishtimes.com

Housing Bridging Loans | ICS Mortgages | Residential Mortgages

The ICS Brand was established in 1864 and has remained a leading and trusted brand in the mortgage market throughout its 150-year history.

www.icsmortgages.ie

 

[Dr Strangelove]

I wouldn’t be in a hurry to tell a lender that I was very likely to make an early repayment before I had drawn down

 

[Brendan Burgess]

If you go to Spry, they will want to know why you want the money. And it's better to tell them the truth. And it's probably better for an 85 year old who might well worry if he misleads them.

 

[Bronte]

Why does he want to downsize? From what size to what size? Seems a very stressful idea given his age.

Despite what he wants he should sell his own house first. When that goes thru he buys what he needs. And goes to live on a cruise ship for a couple of months in the meantime.

 

[Des Pondent]

Any and all advice/ guidance/ pitfalls would be really appreciated

Moving home is very stressful.
Your father has a home, a comfortable income and savings.
Unless there is a very good reason for moving, I would be encouraging him to stay where he is, it doesn't matter if the current house is too big for his needs.

 

[sonandheir]

Is staying with you for the interim between selling his home and rebuying an option? Maybe use a storage unit for furniture etc.

I think as posted above you will find it hard to get this loan at his age and for this purpose. It's a lot of risk for the lender.