Home Economics: Answering your property questions
Q: I'm retiring in two years with a tax-free lump sum of €86,000 from my pension. With this and other savings, I want to buy a house for myself and my wife in Wexford. We already have our eye on one we both like, that we can rent out in the meantime and are reluctant to let it pass by. Is there any way to get an advance on the money now (I am 63) or would a bank facilitate a loan in anticipation of it, repaid on my retirement date?
In terms of accessing the pension early, it would depend on what type of plan it is. From your email, it appears to be an employee company scheme and it is unlikely you would be allowed draw down on it until the actual retirement date. If you are a director of the company, different rules may apply.
In terms of a bank loan, the existence of the pension won't particularly help you. Under pension rules, banks are not allowed use these as collateral (or security) to back a loan. You can, of course, advise them it's due to be paid in two years, but they won't be able to take a lien or assignment on it as they would, say, a life insurance policy or other assets. I asked Karl Deeter of Irish Mortgage Brokers for his thoughts: "Talk to the trustees about early retirement options to access the money, but this would mean you giving up work.
"A bank or credit union, or even family, may be willing to offer you a loan to cover the intervening period until the lump sum becomes available. You would have to apply for it in the normal manner, but the problem using the pension is that they cannot directly access it if you don't make your repayments."
Q. I'm in debt for 18 months and haven't seen any sign of the so-called recovery. My job put me on short hours and cancelled overtime. As a result, I've fallen behind in the mortgage and have now got a letter from the bank telling me I'm in trouble. I haven't told my wife and I am very worried, but I can't see a way out of it. I can't afford a solicitor to reply to the letters I'm getting and I'm too embarrassed to go to the Money Advice and Budgeting Service (Mabs).
A. Firstly, know you are not alone - not by a long shot. There are about 85,000 mortgages in arrears, with 33,000 of these in arrears of more than two years. There is plenty of help out there, but I think telling your wife is the first step as you will need to approach this together - it's her debt too.
There are plenty of private organisations specifically set up to help people with mortgage and other debts, including the Phoenix Project, Irish Mortgage Holders Association and New Beginnings, but make sure you're not paying fees you don't have to as so many services are free of charge. A new Government initiative called 'Abhaile', to help with mortgage debt resolution, gives access to solicitors or accountants under a free vouchering system.
The Insolvency Service of Ireland is the State body to deal with debt at all levels from low level to mortgage (you don't need to become bankrupt to get help). They do this, in the first instance, in conjunction with Mabs. You should not be at all embarrassed to contact them. They are well used to dealing with people exactly like you and will do so confidentially on a one-to-one basis. The very first thing they will do is get creditors off your back and stop those letters and phone calls.
I'd urge you to check out the www.backontrack.ie website, which outlines options that are available or, if you prefer, just text GETHELP to 50015. See this as a new start, rather than the end of the road, if you can.
The Ryan Review
No sooner had Michael Noonan launched his grand plan in the Budget, the 'Help to Buy' scheme has run into problems with the Central Bank.
Although he claimed to have got approval from them before announcing the tax rebate initiative, it seems there was still thinking time needed by the overseer.
While they're okay with the scheme itself, which allows first-time buyers (FTBs) of newly-built homes to get up to 20pc back in a rebate over four years, the measure is capped at houses costing up to €400,000, which covers virtually everything outside Dublin. So far, so good.
However, Mr Noonan increased the house purchase limit to €600,000 (although there's no extra money to be gained). The CB didn't like the look of that and knocked it on the head.
Noonan's logic was that he didn't want to have Dublin FTBs who might be buying just over the €400,000 limit, lose out.
Although 64pc of FTBs buy for under €250,000, they're not doing so in the capital.
The CB reckons it might cause over-borrowing.
In addition, it's pointed out that the 80pc LTV rate (which was a minimum for the scheme) should be 70pc, for the same reason.
Both changes will probably now be made - leaving nobody in any doubt who's in charge.