House deal offer

T

traderbill

Registered User
Messages
13
House value €165,000
Mortgage €80,000
Joint Income €30,000
Age 65
Repayments €1,500 per month for 5 years

Offer - Sell house to a company for €80,000 and reside rent free for both lives.
Comment on this offer.

 
From a purely financial point of view, it is a poor deal. If considering this, it would be purely from a personal circumstances perspective - how is your income going to change over the next 5 years, how is your health, do you have any dependents to whom you'd like to leave an inheritance, etc.

Based on the finance alone, your mortgage repayments are €90,000 for the remaining term of the mortgage, after which, you are left with an asset worth €165,000 and can live rent free for both lives anyway. The property will obviously change in value along with the rest of the market - probably up but, possibly, down.

Then, if you choose to take the offer, there's the added complication of the detail of the contract. What happens if you want to move home? What happens if one of you needs to go into a retirement home?

Personally, I'd continue paying down your mortgage and keep the house. The flexibility in owning the house outright as opposed to the mere right to live in it rent free is worth the sacrifice involved in making the monthly repayments over the next five years.
 
If money is an issue for you, would you consider selling the house now, pay off the mortgage and maybe have enough left to buy a smaller flat outright.
 
Aside from the questions Ronaldo has raised, it seems to me, from a maths/financial perspective to be a good deal.

You get €80k now and no longer have a 1.5k monthly outgoing for the mortgage. (1.5k x 12 x 5 years = 90k) if you discount back to the present value that 90k and add it to the 80k then thats what you are effectively getting for a house that is worth (165k - 80k = 85k). Good deal.

Not sure what the tax implications would be.
 
traderbill said:

Offer - Sell house to a company for €80,000 and reside rent free for both lives.
Comment on this offer.
Click to expand...

Is this the company’s line of business ? If so can you name the company, presumably they have a website, would be interested in looking at terms / conditions etc for such an arrangement, it might make identifying problems easier.
 
twofor1 said:
Is this the company’s line of business ? If so can you name the company, presumably they have a website, would be interested in looking at terms / conditions etc for such an arrangement, it might make identifying problems easier.
Click to expand...
Very private company. No website.
 
noproblem said:
Are you involved with this company in any way, apart from this offer?
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I know the company director ceo. It is very sound.
ronaldo said:
From a purely financial point of view, it is a poor deal. If considering this, it would be purely from a personal circumstances perspective - how is your income going to change over the next 5 years, how is your health, do you have any dependents to whom you'd like to leave an inheritance, etc.

Based on the finance alone, your mortgage repayments are €90,000 for the remaining term of the mortgage, after which, you are left with an asset worth €165,000 and can live rent free for both lives anyway. The property will obviously change in value along with the rest of the market - probably up but, possibly, down.

Then, if you choose to take the offer, there's the added complication of the detail of the contract. What happens if you want to move home? What happens if one of you needs to go into a retirement home?

Personally, I'd continue paying down your mortgage and keep the house. The flexibility in owning the house outright as opposed to the mere right to live in it rent free is worth the sacrifice involved in making the monthly repayments over the next five years.
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Note
Further information/question
Monthly income €2500.
Monthly repayments €1500.
Can €1000 per month run a house for two people?
The incomes are state pensions.
 
traderbill said:
I know the company director ceo. It is very sound.

.
Click to expand...

Nothing or nobody is very sound. Do you have a solicitor or accountant to advise you on this. Sounds exceedingly dodgy to me.

What is in it for the company.

Why is there still 5 years left on mortgage at age 65 - generally people of your age group would have paid this mortgage off by around your fifties or well before 65.

Why are you asking how much it costs to run a house, aren't you doing that right now.

I've nothing against you signing the house away as long as it makes sense financially. I presume this idea would not have implications for you in relation to old age health care, particularly care homes. And as far as I can make out, being poor or very rich is the only way to go for old age in Ireland.
 
Bronte.
1. Company will own the house when we both pass on.

2. I remortgaged for business and it failed.

3. Explain or direct me to website relating to "being poor or very rich is the way to go for old age in Ireland."
 
jim said:
Aside from the questions Ronaldo has raised, it seems to me, from a maths/financial perspective to be a good deal.

You get €80k now and no longer have a 1.5k monthly outgoing for the mortgage. (1.5k x 12 x 5 years = 90k) if you discount back to the present value that 90k and add it to the 80k then thats what you are effectively getting for a house that is worth (165k - 80k = 85k). Good deal.

Not sure what the tax implications would be.
Click to expand...
We do not understand reasoning here.
 
This is an equity release scheme, there are companies that offer this and it is quite common in the UK. One example is attached (and I have no connection with it)
[broken link removed]

It sounds as if this could be a more local arrangement between people who know each other and I would be nervous about that. There are enough posts on here about property where relationships with a person who was at one stage thought to be "sound" went pear-shaped

The OP should take some serious legal advice here from an independent solicitor with no connection to the company director.
 
traderbill said:
We do not understand reasoning here.
Click to expand...

1. The company pays you 80k for the house? yes?
2. You no longer have to pay back your mortgage? Yes? => a saving of 1.5k per month for 5 years left on mortgage = 90k.
3. so taking a simplistic view if you add the proceeds (80k) to the savings (90k) and take away what the house is worth (value minus remaingin mortgage) = > 90+80-85=85k profit.

Let me know if I have made a mistake or you dont understand something.

So from the info you have given I cant see any reason why you wouldnt grab this deal.
 
jim said:
1. The company pays you 80k for the house? yes?
2. You no longer have to pay back your mortgage? Yes? => a saving of 1.5k per month for 5 years left on mortgage = 90k.
3. so taking a simplistic view if you add the proceeds (80k) to the savings (90k) and take away what the house is worth (value minus remaingin mortgage) = > 90+80-85=85k profit.

Let me know if I have made a mistake or you dont understand something.

So from the info you have given I cant see any reason why you wouldnt grab this deal.
Click to expand...
 
Just to understand better Jim.
1.€80k comes in and pays off mortgage.Yes.
2. €90k outgoings will saved over 5yrs.Yes.
Total turnaround €170k.
House value €165k(+or-)
Outstanding mortgage €80k
3.€165k - 80k = €85k. Yes
4. Rent free for two lives.
5. No house owned on death 5 children.
6. My full understanding of the proposal. Comment on point 4 & 5 in particular
 
this is more complicated than I had originally thought.

Your choice is to give up ownership of your house (and your 5 kids inheritance) for the benefit of a better standard of living for the remainder of your life (because you will have 1.5k extra per month in disposable income for the next 5 years and thereafter also as you will not need to pay rent).

So you are essentially making (1.5k x 12 x 5 = 90k) + (whatever rent you would notionally pay to stay in the house from after 5 years until you both pass on).

So you are been asked to sell your house for 90k + x. Assuming you are both 65. In 5 years you are both 70.

Depending on how healthy/lucky etc you are let's assume you both live to 80.

Let's assume the house would rent for 1000/month.

This is a very rough estimate but hopefully you see the logic..10 years x 12 months x 1k = 120000.

So I think one of the factors that determines how good of a deal is dependant on how long you are your wife live to take advantage of the free rent..

What rent per month do you think the house could command..

How financially comfortable are your children - they will loose out on inheritance.

For me the key thing would be that your standard of living would potentially improve by having more disposable income for the rest of your life.
 
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