Parents Want to Equity release in their late 60's

Is there any website or information on this idea I think its called SHIP or something.

My Parents met some "consultant" who was reluctant to produce figures but told them that he can organise an Equity release this lat on in their lives....??
Anyone come across this ...??

www.shipireland.ie

See also
[broken link removed]

and Bank of Ireland's Life Loan
[broken link removed]

Whichever product is chosen, it tends to be an expensive way to raise money and frankly I'd only see such products as a last resort in times of dire need.

My folks did this about 6 yrs ago, in their 60's. It is an expensive way to raise money, but it was the only way they had of getting their hands on some decent money to do what they wanted to do. They had retired and wanted to spend half the year in spain and half here. This equity release funded this. and more. This is paid back when they are both gone, out of our inheritance so to speak. And quite frankly i would much rether see them enjoy it now and getting the benefit of it now, then leaving it to me and my siblings. The portion to be paid back when devided between us is really not a lot in todays terms. Also, they released it about 6 yrs ago, and the value of their house has gone up so much since then that it is now an even smaller percentage to be paid back than it was the. for example, they borrowd 20K out of 250000, to be paid back at about 40K, not sure of exact figures, but now the house is valued at 480 and they still only have to pay back the 40k. See what i mean? They have had a marvellous time over the last 6 yrs, they deserve it. Its their time now. I think that if it enables them to do what they always wanted, then 'expensive' is arguable. No financial advice here, just my take on the subject.

Thanks for that, I feel if its that expensive my other sibling and I could probably take out a loan for €100k or so interest only and repay it as we see fit ........

Thanks for the comments ..

Hi Reddy,

I agree entirely with your assessment - better for the parents to enjoy the money now than restrict themselves so that the children can benefit later by inheritance. I think I'll re-word my earlier comment to soften it a bit - Whichever product is chosen, it tends to be an expensive way to raise money and frankly I'd only see such products as a last resort when other cheaper options are unavailable.

By the way, I think it's important to note that Reddy's parents seem to have gone for the Bank of Ireland Life Loan which is a bank loan with no repayments. Therefore any increase in value of the property is for the benefit of the family.

The other two variants, SHIP and RRL buy a portion of the property so that if the property value increases, so too does the value of their portion.

Yes, i have to admit i dont know the fine points of their arrangement but you would be correct in saying there are no repayments, which of course suts my parents situation perfectly. It has worked very well for them. We had looked into taking out a loan for them, but they preferred this way as there was a lot of equity in the house and even more now. Personally I would love to see them spend the whole bloody lot!!!!!!!

The BOI Life loan seems to be the best and most transparent option , letting someone have a % share of your assest is crazy , if you enjoy an increase in the value of the property then so do they. It is truly a last ditch option to let someone buy into your asset for cheap money. The original Life Loan criteria seems very good and to be honest if either of your parents need to sell the property for health reasons I would rather be dealing with BOI then some startup "Oceanfinance"type company who cost you the earth in the long term.

I would rather be dealing with BOI then some startup "Oceanfinance"type company who cost you the earth in the long term.

Click to expand...

While I don't disagree with your general point, to be fair both SHIP and RRL are pretty well-established firms backed by some pretty well-known and respected Irish business people - RRL by various members of the Wyse family (Wyse auctioneers) and SHIP by Billy Kane, former Managing Director of Irish Permanent Finance and Chief Executive of Irish Permanent.

If property values fall or level out, so too does the value of their piece of the asset. Bank of Ireland will make money whether property values rise or fall.

No connection with any of these organisations - just playing Devil's Advocate.

Thanks to all for comments on this .....

Mind you what is not mentioned is that if house price inflation is at 4%, then the BOI option means that despite the interest, the % (incluidng the interest) remains close to to the original %.
Also the SHIP and similar are a % of the property..so given the rather high inflation rate for housing, those deals are very expensive.

They are the not the same thing.

In any event, people 65+ do not want to move, which if they did would obviate the need for these. The sons / daughters should realise that if your only income is the state pension then you survive, not live.

My folks are in their early 70's and if they had not released some of the equity in their house, they certainly wouldnt have the lifestyle they have now. They both worked hard all their lives and are very entitled to enjoy their retirement to the full now. They are both healthy, spring chickens, and spending half year in spain has added about 10yrs or more to their lifespan by the looks of them. Its their money and their house. Should they choose to leave it to us in the event of their death then great. If they spend every penny, thats great too. As far as we are concerned, we got what we are 'entitled' to. Food, clothes, love and an education, till we flew the nest. The rest is theirs to give or not if they so choose. But there is something great about seeing your parents sipping cocktails at 72, without a care in the world. If this is achived by paying the bank a few exra quid (40 K or SO!!) then its gotta be wothr it. Youc ant take it with you after all.

I have been checking out the options for equity release for my mothers property and have come to the following conclusions:

- Ship and RRL provide may take 50% of a 400k property, the "Lump sum" they give you could be as low as 100k instead of the 200k you would expect. They then also gain from the property inflation as they own 50% of your house. Because they own a share in the house they can also ask you to make improvements so that they can ensure their "investment" is worth as much as possible. They *may* help with the cost of the improvements, but then again.... Can you imagine asking for a house to be rewired around an elderly couple. I rang the [broken link removed] and they mentioned that neither RRL or SHIP is regulated by them because they are not lending products they are "sale" products, I wouldn't touch these products, too expensive.

- Life Loan is regulated by IFSRA, but with a high interest rate of 6.4% APR compound. Do the sums on this, their example in the brochure is 62,500 borrowed means 158,447 to be paid back after 15 years, phew, hefty.

Its still the best option however in my opinion. They will have a penalty for getting out before the 15 years is up though.
The formula they give is:
(Amount x (R-R1) x Time) / 36,500

They don't make it easy to find out how much it will cost to get out of this. I'd love to see an excel spreadsheet that shows the costs...

I heard a rumour (on a radio program) that the government here are considering some sort of state sponsored equity release program to try to stimulate growth in the markets, has anyone else heard anything similar ?

Cheers,Craig

Well Craig:
Do the sums on SHIP and RRL for any level of house price inflation you think is reasonable. Then compare the LifeLoan. Despite the Bank nailing the cost, they are not able to comfort you by showing scenarios. To begin with SHIP etc give less than 50% in the € as a starting point. So even if there was zero house price inflation, that itself takes a few years before LifeLoan could 'overtake' it. With moderate house price inflation, SHIP and RRL ascend into double digits as a matter of course. If anybody believes there is likely to be 'zero' or negative house price inflation for a continuous period, then we ought to know.

However, given that you are a decent sort, you could of course finance your parents yourself - as indeed any child 'could' rather than would. What this LifeLoan gives a parent is independence and power.

If any of you think that people over 65 on state pensions are 'living' then sanity check is required. Secondly the research was that the customers did NOT want a variable rate product, now or ever. Similarly for some reason, selling the house is considered not an option, because of their children, friends and its where they lived.

Its clear that the product is only suitable where other options (such as the children stumping up the cash) have been explored.

If somebody needs to 'get' out of the product, then either they did not need it in the first place, or they got money they did not have at the time.

As for the State, let it be known that both Social Community and Family Affairs have no idea of the state of poverty for this age group. Secondly the cads in the Revenue dont allow relief even for qulaifying purposes.

The State will get a hiding if the people of 65 and over stand up and demand their rights. I have seen shocking examples where the seniors are treated shamefully by ..
social communiyty & family affairs; Revenue (lump sum policies -- can get jail for this desite that it is up to 25 years ago... funny cant prosecute child abuse because of lapse of time) and their 'children'

Wake up and see how your folks over 65 are 'living'. Its an inditement on the nation.

Try calling Ocean finance, you could get a lump sum, nice car, pay the bills and even have enough for a little holiday.



Then one day a man knocks on your door and tells you that you cannot live there anymore, because they own it.



These schemes are outrageously onerous towards the borrower; I think raising a personal loan between family is a far better option. Remember if your parents need to go into a home, get ill etc they may need the house then more so than now, the devil is in the small print.

The point being is that LifeLoan is NOT like the other schemes