Equity Release to fund Children's Third Level Education?

Manuel

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146
Hi!
We have a rental property for which the mortgage is paid off.
We have a current mortgage on our PPR.
Can we re-mortgage some of the equity of the rental property for a college fund?
Rather than sell up outright, we would rather release the equity in part as needed, as such ...

I can't find much on t'internet about Equity Release other than for Retired people to boost their own income.

Thanks!
/M.
 

David1234

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215
How much is left on your own PPR? @ what rate?
What Age are you?
How much do you and your partner earn?
What is the rental property worth?
How much rental income do you get for your property?

Without any of the above information I would look at selling the rental, put aside the money for your sons education and putting the balance off your PPR. This may change if you have a tracker, are achieving a high yield on the rental or earn a high wage.
 

Manuel

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146
Hi David,
Thanks for your reply.

How much is left on your own PPR? @ what rate? 110K @ 3.6% SVR (I know, I know ... in the process of switching!)
What Age are you? 50
How much do you and your partner earn? 120K
What is the rental property worth? 160K
How much rental income do you get for your property? 750 p/m

The purpose of keeping the rental property was always to (help) fund children's third level education.
The only reason we would prefer not to sell is that we would then have to put the surplus into a low yield savings a/c.
One of many pieces of advice I picked up from this forum over the years was not to pay off PPR as it's your lowest interest loan.
Oh, and I forgot to add the very significant detail that there are three more coming after the eldest lad ....
The thread title should probably say "... Children's Third Level ..."

Thanks again.
 

David1234

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215
What other debts do you have if your PPR is not your most expensive loan?

How much p/a will it cost to put each child through 3rd level and a potential masters? Your children should probably be working part time especially in the early college years to lessen the burdon on you.

Equity release products seem to be quite rare these days so I don't think that will be a runner, although I may be wrong. Even so, how do you intend on financing the next 3 kids 3rd level? Would you need to look at further equity release?

Could you look at extending the term or your mortgage out to 70 when you switch? This would lower your monthly repayments and take some pressure off.

I'd say your best bet is to fill out the makeover template to give a better overview of your financial position.
 

Manuel

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146
Thanks again.
We worked hard to hold on to the rental property until that mortgage was paid off, in order to have a college fund when the time came around. One good thing about having the equity tied up in the second property all those years was that we couldn't get at it (liquidate it) whenever temptation called ...

Now that it's time to start eating into it, I guess I'm trying to figure out how to draw it down as needed. Hadn't fully thought this part through :) .... selling outright of course is an option, but I'm just trying to explore alternatives ....
 

dereko1969

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2,667
Is the rental property in the same town as you? Could it work as a location for your children to use whilst studying which would reduce the cost of supporting them through college?
 

Manuel

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146
Just a quick update: Both Ulster Bank and BoI have refused a re-mortgage of my rental property.
UB said they don't do Equity Release mortgages for that purpose.
BoI do allow it (see here), but rejected me up front based on my abillity to repay :rolleyes: ... God I hate BoI .....

Considering a Credit Union Education Loan @ 6% now to cover year 1 .... and maybe start preparing to sell the rental property next year.
 

cremeegg

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3,080
With a salary of €120k you shouldn't need to sell an asset to finance your kids education.

And on top of that the rental income alone is nearly enough to finance the education, tax aside.
 

Gordon Gekko

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I agree with the above, but if cashflow’s your issue, try Dilosk. Interest only for 15 years; rate circa 5%. They do equity release on BTLs.
 

Manuel

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146
I agree with the above, but if cashflow’s your issue, try Dilosk. Interest only for 15 years; rate circa 5%. They do equity release on BTLs.
Thanks for the tip. I see their minimum loan size is 40K, which is a bit restrictive, but definitely worth considering.
 

Bronte

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13,681
And on top of that the rental income alone is nearly enough to finance the education, tax aside.
How do you make out he'll have enough from the rental income. He's getting 9K. Let's say costs of 1K. Tax of 4.5K. Leaving him with 3.5. Annually to pay for one child in college never mind 4?
 
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Joan19

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Manuel first off you should not have paid off the buy to let unless you were paying over 7.2% per year bad advice taxman was paying half of your interest on your buy to let,
Just putting this fact out there in case other people are following this advice,
 

Manuel

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146
Manuel first off you should not have paid off the buy to let unless you were paying over 7.2% per year bad advice taxman was paying half of your interest on your buy to let,
Just putting this fact out there in case other people are following this advice,
I don't think you can claim mortgage interest relief on a re-mortgage of a BTL. I didn't pay off my BTL mortgage early, it went full term.
 

Laughahalla

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133
Sell the rental, pay off your PPR and be 100% Debt free. Bankroll the children's college from salary.
 

Joan19

New Member
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3
I agree with Laughahalla , you can always buy back using a mortgage on another buy to let ,
Maxing out your pension cont should work out better than a buy to let at this stage ,you could feed some of the money left over from your buy to let over time into pension,
 
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