HELP - Parents Inadequate Retirement Income

[gweebarra]

My father has recently retired and it has become apparent that he didn't adequately plan for the future. His pension fund was very small and has very few other investments. However, my parents do own their own home (less Eur 9,000) which is worth roughly Eur 450,000.

I'm looking at options of increasing their disposable income and would welcome your advice.

The siblings (4) have recently entered into their own mortgages so it would be difficult for us to contribute or try to buy the property from them.

BOI offer a Life Loan product and I know it has savage compounded interest rates. Would this be the only option open to them (assuming they clear off the remaining Eur 9000)?

We are aware that the estate will seriously decrease in value, especially if the folks live to a ripe old age.

They also do not want to 'trade down' to a smaller property.

Would the BOI life Loan also affect their state pension entitlements?

Is there any other way of releasing money from the house to supplement their income?

 

[Guest]

> BOI offer a Life Loan product and I know it has savage compounded interest rates.

Yes - be aware that the initial portion of the house remortgaged can very soon grow to encompass most or all of the property in a relatively short period of time. Also, these sorts of products can ALSO involve hefty charges so read the terms & conditions carefully.

> We are aware that the estate will seriously decrease in value, especially if the folks live to a ripe old age.

If this is acceptable to all, in particular your parents, then some sort of equity release as mentioned earlier MAY be a suitable option.

> They also do not want to 'trade down' to a smaller property.

To be honest this might be a better option if there was any possibility of it happening - they could pocket a CGT free portion of the resale gain and move to a new PPR.

> Would the BOI life Loan also affect their state pension entitlements?

Depends. Are they on contributory (PRSI related, non means tested) or non-contributory (means tested) pensions?

www.welfare.ie/schemes/re...index.html

 

[Guest]

> However, my parents do own their own home (less Eur 9,000)

Do you mean that there's still €9K outstanding on the mortgage? Did they buy late in life or were they on a particularly long mortgage term?

Are they sure that they're claiming all their tax credits/allowances and welfare entitlements?