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Home economics: answering your property questions


Couple need a mortgage to downsize their home

Couple need a mortgage to downsize their home

Couple need a mortgage to downsize their home

Our expert answers your property questions.

Question: I am 53, my husband 46, both in permanent jobs. We want to down-size our house and need a mortgage but our current provider, EBS, will only offer a 12-year term to bring me to 65. This makes the repayments too expensive. Is there a better provider who will let the term run to age 70 or a policy to cover the extra five years?  Surely with the pension age pushed to 68 loan repayments can reflect this or is there a policy to cover the difference?

Sinead replies: Down-sizing normally frees up cash rather than requiring it, so I'm assuming you are considering moving to a different area with higher house prices and you may need to reassess this. No bank really wants pensioners paying back loans; there's an immediate drop in income and therefore your capacity to repay is constrained, although it didn't bother them too much during the boom, with many elderly now reaping the cost of that action. Associated costs like life cover also become more expensive.

KBC will mortgage to age 68, or whenever your retirement date is, but I'd talk to a broker first about negotiating the term and reasons for it in any event. Karl Deeter of Irish Mortgage Brokers says the difference in stretching borrowings of say, €100,000 from 15 to 18 years is €89 a month. But if you have no kids left and little outgoings, I can't see how it would be a deal breaker. There's no policy that I'm aware of which will mitigate the gap. Consider the reasons for the extra mortgage and whether you could downsize nearer home first and get an estate agent to do a proper valuation for advice.

Question: Mum died last year following my father's death the previous year. It has been a traumatic time but my brothers and I have decided to put the house up for sale as none of us wishes to buy it. We're concerned with the knowledge it is an 'executor sale' might affect the price achieved. Does this have to be disclosed? The house is in a good part of South Dublin but in a little disrepair.

Sinead replies: I'm sorry for your recent bereavements. Selling the family home is always traumatic, but it's good to see your siblings are in agreement and that your mother left a will - so many cases go to court intestate and it can cause real problems down the line when families come to make this difficult decision.

There is no legal requirement to announce in advance that the sale is from an executor says solicitor Susan Cosgrove of Cosgrove Gaynard. However, she adds that it will become clear once contracts are exchanged, but by then the property will be sale agreed. You will need to tell the estate agent, as they'll have to be assured that you have the authority to sell the house. S/he won't be obliged to pass along this information to prospective buyers.

In terms of the sale itself, you could do worse than get the property ready to achieve a better price. Clearing out old furniture, giving it a lick of paint and a good clean can go a long way to making viewers feel better about the house.

Bear in mind that as executors, if there is an Inheritance Tax issue you need to have this sorted within one year of the date of your mother's death. You don't say how the proceeds are to be split from the estate, but a son/daughter comes under the Class A threshold which means the first €225,000 is tax free, as long as no other gifts or inheritances have been taken.

The Ryan Review

Michael Noonan doesn't trust us. We may not all have partied, but he believes a fair chunk of us can't wait to blow up the balloons and pop the champagne again - he needs to start playing 'bad cop' again before we lose the run of ourselves.

When the Central Bank brought in their recent new deposit requirement, Noonan was asked by many in the media if an indemnity insurance to cover part of the difference - a deposit insurance scheme like they have in other countries - was a good idea.

This means a portion of the risk on borrowing is insured against another price drop in the property market. At the time he seemed to think it was a good idea and said so.

It seemed like a solution to the problems facing people getting on the housing ladder and putting them off borrowing elsewhere to get their 20pc deposit together.

However, proposals to allow such cover would have to have been put through in the recent Finance Bill to make it possible, but it wasn't in there. So now the insurance sector has been prevented from designing the indemnity product.

The initial idea hinged on the fact the insurance industry would take the fallout. However, it soon became apparent that in the past the insurance sector itself had to be bailed out when it over reached.

Someone must have had a few choice words in his ear down at the Central Bank. Words like 'ICI', 'PMPA' and 'Quinn' perhaps? Because we know all too well bailouts are not limited to banks.

Indo Property