Home Economics: Our property finance expert answers your questions
Q My husband and I co-own a modest house, with no mortgage attached to it. We bought it new in 2014. Our daughter (43) has her own independent flat in the house and pays rent and utility bills. We are in our 70s, living on our pensions only. She has Asperger's Syndrome, but is able to live her life quite comfortably and has a successful job. Her only financial obligations are for her car. We have a plan to sell the flat she is living in to her. The idea is that instead of paying rent she would acquire property and we would have some money for keeping the house up to standards, or even upgrade it if new environmental rules will be applied. What do we have to do to, sort of, legally detach the flat from the house and make it 'mortgage worthy'? Would it be possible at all?
A First of all you can simply gift her the flat. Under Revenue rules, a child can receive gifts or inheritances of up to €320,000 from a parent without any tax being applied (plus an additional €6,000 in the year of the transfer as a 'small gifts exemption' from you both).
The total is a cumulative figure, and the transfer must be based on the open market value of the property - a local estate agent can evidence this for you so you don't run into problems later on after you pass away. That won't generate capital, but I wanted to put it out there as the least complicated option. A solicitor will draw up the simple document.
In terms of selling her the property - the same rules apply. But if it's not at open market value, then you run the risk of Revenue deeming it partly to be a gift, but that in itself is fine, based on the rules above. Your solicitor will make sure the arrangement is at 'arms-length' and the transfer of funds reflects the transaction. I don't have sufficient detail from you about how the flat is attached to or within the property. This would be vital for any bank to extend a mortgage on it, and also with regard to any future sale of the property; what you don't want is a new buyer being in a position to object to her living there or have the right to evict her.
Talk to a solicitor and a local estate agent (to get a firm description) as a first step.
Q I'm struggling to understand why it's so hard for me to get home insurance. I was made bankrupt on March 31, 2014 and discharged on July 29, 2016. But when I inform some insurance companies, as they require, they won't quote me. Why should I be discriminated against like this? I have never been charged or convicted of fraud, purely guilty of my business failure, as many others around the same time.
A I'm afraid the issue here is what insurance companies term 'moral hazard'. That's a not-very-nice way of saying that they're worried about your financial experience in the past and that it could constitute an added risk for them.
Deirdre McCarthy, of InsureMyHouse.ie, says: "Some insurers would consider it [a past bankruptcy] as a poor moral hazard. My advice for this reader would be for them to contact a local broker who would have experience in dealing with non-standard risks. They will know what insurers will consider quoting. Let them do the work for you as they are qualified to deal with these harder to place risks and would definitely have a number of insurers who would quote you."
The Ryan Review
A funny old story emanated from non-Euro member Denmark recently.
Its fourth largest bank, Jyske, has started offering home loans with negative interest rates. Yes, just when you finally get to the point where you're standing on the bus telling people you DO know what a tracker mortgage is, along comes something so out-of-kilter with the mortgage model that it stops you in your tracker, er, tracks.
Interbank deposit rates are already in negative territory. Big institutional depositors are finding themselves being charged just to have banks sit on their funds. But to date, it hasn't affected ordinary people. They've been getting 0pc for the best part of two years now on savings and seeing their mortgage rate steadily drop (although not as much as other Europeans).
Negative rates occur when monetary policy fails and only if you control your own money, like the Danes.
In Euroland, the ECB has been singularly unable to maintain the 2pc interest rate it is beholden to, so in effect, for real people, inflation is eating into their savings, putting them in negative buying territory. It's called a liquidity trap.
However, advertising a negative rate is a new one. Jyske borrowers get a rate of -0.5pc for a 10-year mortgage. In other words, they give you money back at the end of the month.
Could it happen here? Well, if you're the owner of a valuable tracker on ECB+0.5pc… watch this space…
Sinead Ryan presents 'The Home Show' on Newstalk every Saturday at 9am