Equity Release - Novice !!

Hello,

Situation is as follows;

House worth Eur 300k

Current Mortage is Eur 228 k

I have another loan which totals about Eur 20k which I am paying off over the next five years. This is killing me as the repayments on this are 600 a month.

Ideally, I'd like to take equity of Eur 20k from the house to repay this loan as the additional repayments on the new mortgage would be insignificant.

Is this reasonable from the bank's perspective? Will they just look at repayment capacity on teh new loan. I've only had the mortgage for a year and haven't missed a single payment.

Any advice would be appreciated.

so long as your income qualifes you to borrow a total mortgage facility of
€248,000 then your mortgage lender should not have a problem with this, yoy should consider keeping the term at 5 years, which would reduce the repayment to approx €366 per month

As Molly says it comes down to your income, although some lenders won't do top ups/further advances at a high percentage advance. Who's your mortgage with?

Sarah

www.rea.ie

Mortgage is with Ulster Bank and it's a Tracker Rate.

Molly, don't quite understand your advice of kjeeping the term at 5 years. If I can get equity of 20k from UB, I'll repay the other loan so I'm saving 600 a month, albeit that my mortgage payments will increase slightly?

my suggestion is to get the top up or equity release for 5 years, not extend it out to the same term as your mortage ie 25 or 30 years, you can avail of a shorter top up term to the original mortgage. Theres little or no sense in replacing a debt over 5 years with a debt over 25 or 30 years.

Molly said:

my suggestion is to get the top up or equity release for 5 years, not extend it out to the same term as your mortage ie 25 or 30 years, you can avail of a shorter top up term to the original mortgage. Theres little or no sense in replacing a debt over 5 years with a debt over 25 or 30 years.

Click to expand...

€20k @ 3.4% over:

20 yrs interest would be €7591

5 yrs interest would be €1776

you also might want to check out your mortgage protection insurance, as you would not be insuring the original amount, but a new larger amount.

Molly,

"which would reduce the repayment to approx €366 per month"

Repayments on €20K over 5 years is higher than 366.

Around 446 per month at 3.35%

techman said:

Molly,

"which would reduce the repayment to approx €366 per month"

Repayments on €20K over 5 years is higher than 366.

Around 446 per month at 3.35%

Click to expand...

Not according to Karls mortgage calculator which gives E362.50 which is near enough Mollys estimate.

How did you calculate it techman?

€20,000 over 5 years at a nominal interest rate of 3.65% is exactly €365.18 per month.

Apologies. My mistake.

Was thinking over four years.

Sorry!