Rental property in retirement outstanding capital debt

M

moneymakeover

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Consider rental properties in retirement

Say they are increasing in value

And there is some outstanding debt say 10%

At retirement time will the banks allow an indefinite interest only period?

And take it from the estate in the end?
 
The mainstream lender won't do this. (They should because it's a very safe and profitable investment.)

Pepper might do so.

Brendan
 
I very much doubt any lender would take the risk of not being able to recover the principal outstanding from the estate of a deceased borrower in a timely and cost effective fashion.
 
Is this a property / mortgage you currently have, or more a theoretical question?

If you already have it'll be down to your banks policy when you get to that age.

I understand it's unlikely at the moment that any of the mainstream lenders would lend for BTL beyond retirement age. You could try Dilosk or Pepper who specialise in this area. It would probably be a condition that you sell the property on retirement, or use your pension lump sum to repay the Mortgage.

If you're planning this to be your retirement fund, you should really investigate the possibility of purchasing through a pension structure if your circumstances allow it.
 
There are no reverse mortgage facilities available in Ireland at present.

I can't see why a bank would want to do it for 10%. In most instances, the 10% will be relatively small and the compliance cost of maintaining a mortgage over such a long period and then trying to get paid after death would just be too much hassle.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Would a credit union not offer a term loan (say 10 years)?

10% of most properties would be a small enough number.

€30k over 10 years would be circa €350 a month and tax deductible. Minor enough in the context of rents these days.
 
Doesn't it all depend on what their retirement income is? Carrying debt into retirement is the biggest mistake a retiree can make. Income decreases but debt doesn't, it just takes up a larger percentage of income.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
What if it's a tracker rate that runs well into retirement 10, 20 years

Does it make sense to keep it and pay down gradually?

Say the mortgage is just 20% of the rental income

Say paying back 50k over 10 years?

And if the bank has agreed to the term ... they can hardly object to a person retiring?
 
They would never know.

Once the borrower keeps making the repayments, they have no way of knowing.
 
I have another angle on this same question.

Let's say on a low rate tracker say 1%.

Say the bank has agreed to part of the loan being interest only until 2045.

Why pay down the loan and lose that tax deduction?

And put savings into another investment?
 
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