Home equity loan

M

Markjbloggs

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Apologies if this is not the correct forum - are there financial institutions that offer home equity loans with repayment based on the future sale of the home?
 
SHIP/BoI LifeLoans/Residential Reversion type products are the only thing that I can think of but these are normally pitched at elderly home owners (asset rich/cash poor) who might want to release equity in their home at the cost of the lender taking an owning interest in the property which is liquidated when the house is eventually sold (often when the elderly owner dies or sells up to move, downsize, enter residential care etc.). See this Indo article (free registration required) and this AAM thread for more on these products. Is this an academic query or in relation to some actual real situation?
 
ClubMan said:
SHIP/BoI LifeLoans/Residential Reversion type products are the only thing that I can think of but these are normally pitched at elderly home owners (asset rich/cash poor) who might want to release equity in their home at the cost of the lender taking an owning interest in the property which is liquidated when the house is eventually sold (often when the elderly owner dies or sells up to move, downsize, enter residential care etc.). See this Indo article (free registration required) and this AAM thread for more on these products. Is this an academic query or in relation to some actual real situation?
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Semi-hypothetical situation, part of a what-if scenario. Basically, kids are almost finished school and will (hopefully) leave the nest in the next 2-3 years, so downsizing is definitely on the cards - house worth €2 million now. Meantime, mom and pop are both self-employed, neither making that much money and would like to get a jumpstart on the "life begins at 40" thing - a bit of extra cash would help in that respect. Looking at something of the order of 5% of the house value as a loan until sale in 2-3 years time. One other thing - pop would like to use some of the loan to finance part of his business.
 
Mom and Pop sell the house,downsize somewhere you've allways wanted to live and enjoy the money!Forget about the kids,they can look after themselves.
 
ClubMan said:
Is the €2M property owned outright?
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Yes, we are in a very fortunate situation, to say the least.

BTW, Clubman, thanks for taking the time to answer these questions,

M
 
You could probably get a small loan ( as %age of 2m equity) with repayment of interest and capital deferred for 2 -3 years, by just saying ure renovating or adding value to house. Ive got a loan for around .5m to build a new house in my side garden - on basis of selling existing PPR in 2 years time and do full repayment then. The site is the collateral security on the loan.
 
Thanks for the thanks mjb.

I was just thinking along the lines of runner - i.e. in specific individual situations such as yours, with such a valuable asset, you might be able to negotiate a special deal that might not normally be publicised for all customers. No harm in asking especially if you have a close relationship with a particular insititution. Be careful to cross check their "advice" and any offers with independent, objective analysis/advice. I don't think that SHIP etc. are really relevant in this situation apart from the many caveats over such products anyway. Can you not expedite matters and maybe trade down now rather than later?
 
ClubMan said:
Can you not expedite matters and maybe trade down now rather than later?
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As in all matters real estate, it boils down to location - where we live is within walking distance to schools and we want to minimize disruption to the kids. Plus, one of our possibilities is moving abroad after the youngest leaves school - an interim move would not make sense, expecially with all that stamp duty down the drain.
 
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