Home equity loans mechanism

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Markjbloggs

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Is re-mortgaging a property the only way through which a person can access the equity in their home? Are there other mechanisms through which a loan can be obtained using the equity as colateral, such as a contract that forces the property owner to sell if he/she defaults?

Also, is is possible to get a home equity loan with repayment based on future sale of the property, if the property owner is not in a position to service the repayments before the sale?

sorry if this is a stupid question, but I have little experience in this area.
 
There is an equitable mortgage which is simply by depositing your title deeds/land certificate with the lender. But the land certificate is in the process of being abolished, so this avenue won't be open to most of the country any more.

Also bear in mind that most mortgages have a clause prohibiting you from securing any further loan on the property without the banks permission. If you have a mortgage, and secure a loan on property without permission you have breached the terms of the mortgage, and the bank is entitled to call the entire loan in.
 
j26 said:
There is an equitable mortgage which is simply by depositing your title deeds/land certificate with the lender. But the land certificate is in the process of being abolished, so this avenue won't be open to most of the country any more.

Also bear in mind that most mortgages have a clause prohibiting you from securing any further loan on the property without the banks permission. If you have a mortgage, and secure a loan on property without permission you have breached the terms of the mortgage, and the bank is entitled to call the entire loan in.
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Thanks j26,

the house in question is mortgage free and has built up a considerable amount of equity during the last 10 years. The title deeds are currently residing with a solicitor - if it were possible, would the processbe as simple as transferring them from solicitor to lender?
 
Markjbloggs said:
Is re-mortgaging a property the only way through which a person can access the equity in their home? Are there other mechanisms through which a loan can be obtained using the equity as colateral, such as a contract that forces the property owner to sell if he/she defaults?
Click to expand...
Apart from the option mentioned below which looks like it's about to disappear I would imagine that most or all lenders would want some legal investigation of the title to be carried out before advancing a loan secured against the property as collateral.
Also, is is possible to get a home equity loan with repayment based on future sale of the property, if the property owner is not in a position to service the repayments before the sale?
Click to expand...
An interest only mortgage?
 
Markjbloggs said:
Thanks j26,

the house in question is mortgage free and has built up a considerable amount of equity during the last 10 years. The title deeds are currently residing with a solicitor - if it were possible, would the processbe as simple as transferring them from solicitor to lender?
Click to expand...

In a nutshell that's the idea (there's a bit more to it obviously - searches and so on).
If your property is registered in the Land Registry, depositing the land certificate has the same effect as title deeds, but since land certificates are due to be abolished completely on 1/1/2010 the bank is very unlikely to agree as their security would end then. If unregistered, you can fire ahead if the bank agree.

Generally, banks are not as inclined to use equitable mortgages as much as they used to - the whole thrust of Irish land law is towards the legal charge, which is basically your standard mortgage.
There's no harm in asking though.
 
Guys,

many thanks for the helpful advice. So just to test undestanding here - the person involved goes to the local friendly bank manager, asks them for an equitable mortgage (in this case, approx 3-4 % of the house equity), manager says "yes, give us the deeds and we'll do a title search, but you will need title insurance", then Bobs your Aunties' husband. If they say no, then the interest only (!!) mortgage may be an option until then house is sold.
 
Markjbloggs said:
Guys,

many thanks for the helpful advice. So just to test undestanding here - the person involved goes to the local friendly bank manager, asks them for an equitable mortgage (in this case, approx 3-4 % of the house equity), manager says "yes, give us the deeds and we'll do a title search, but you will need title insurance", then Bobs your Aunties' husband. If they say no, then the interest only (!!) mortgage may be an option until then house is sold.
Click to expand...

I think that, whereas, in theory, the scenario is possible, the reality is that the Banks won't do it. In an increasingly tight market, to lend, Banks want formal security ( be that title insurance or solicitor's cert), ability to repay ( (a) overall and (b) regularly) and life cover in place in case you pop your clogs during the life of the mortgage. I do not think that they would be willing to lend a sum of money for X period of time unless repayments were being made during the course of the life of the mortgage. As far as I can see, bridging finance is dead in the water - banks are not interested in waiting for their money.

mf
 
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