Where to borrow?

J

Jess

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I have somehow stumbled upon this website and it looks like some of you might be able to offer advice.

I will be looking to borrow from *some* financial institution in the next 12 months and I'm wondering who YOU think will loan me the money and if you have any advice in general.

I'm a single Mum, one daughter. Currently renting.

My parents have applied for planning permission to extend their home to allow for the equivalent of a 2 bedroom apartment for my daughter and I The new build, though part of the house, will essentially be self contained.

I will have to pay for the new build, and the approximate cost will be €130,000.

I already have €50,000 of my own money and the rest I will have to borrow.

The house belongs to my parents and therefore I can't apply for a mortgage. Re-morgating is not an option for them as the mortgage is already paid and my parents are in their 70's. I have 2 siblings and the house will eventually be left to the 3 of us, taking into consideration my investment.

So my question is, who will loan me approx €80,000 in this circumstance? Perhaps the credit union would be more accommodating than banks....but CU repayments would be over 10 years max and I would prefer to pay over a longer period.

Any suggestions/ideas?
Thanks
 
Hi Jess - Congrats on bulding up such a large lump sum to start off with. However, I think you're going to find it damn near impossible to find any lender who would give you 80k on an unsecured loan. What kind of money are you currently earning? Do you have any other loans outstanding?

Would your parents consider doing an equity release on their home/mortgage to release the cash for you? You would then repay their loan over time. However, this could be quite messy legally and from a tax point of view.
 
Thanks for your quicky reply RainyDay.

Apart from a €2,000 loan at the CU I don't have any other outstanding loans. Don't have a great salary but I could afford the repayments on €80,000 if it was over 15 years or so.

Have an SSIA due to mature in 2007.

I think my parents would be agreeable to an equity release on the home, but wouldn't the bank charges be extortionist? Or maybe not? That's the type of thing I am trying to figure out.

Thanks.
 
Jess said:
I think my parents would be agreeable to an equity release on the home, but wouldn't the bank charges be extortionist? Or maybe not? That's the type of thing I am trying to figure out.
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Hi Jess - Equity Release shouldn't be too expensive, though your parents age may be a problem. The banks might be steering them towards the schemes whereby the banks give out cash in return for a share in the property when your parents pass on. See this thread for more details[/url]. I really don't think any CU or other institution would lend you this kind of money unless they can secure the loan via a mortgage on the property. Is their any chance that your siblings could cough up say 30k each (if they have their own properties to remortgage) leaving you with a much more managable 20k to fund.

Have you agreed with your siblings what happens when your parents do pass on? What if they want/need to sell their shares in the property?
 
Hi again,

I will have a look at the thread you suggest.

I'm fairly sure my siblings will want to keep the house so there will be no pressure to sell whenever we inherit. One of them still lives there and could still be there in the long term so it would sort of be divided in two anyway which would suit. I see this as a long term living arrangement for my daughter and I and they do understand this and support extending the house for us.

Not a bad idea to approach them to invest in the build. Would love to steer clear of financial institutions on this. Thanks!
 
Could you use the Deeds of your Parents house as collateral against your loan? Do you have a good relationship with your Bank? You could make an appointment to meet with the Bank Manager and see what they would require from you. There are ways and means around these things. I would think having €50k already will stand to you. Have you checked out the exact cost of the extension? €130k sounds high enough for a 2 bed extension.
 
Jess said:
I'm fairly sure my siblings will want to keep the house so there will be no pressure to sell whenever we inherit. One of them still lives there and could still be there in the long term so it would sort of be divided in two anyway which would suit. I see this as a long term living arrangement for my daughter and I and they do understand this and support extending the house for us.
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Hi Jess - Don't forget to future-proof whatever arrangement you come up with. You never know what's going to happen to your siblings (e.g. major health problem, unemployment) that could change their attitude regarding the house. If you are going to make this a home for your and your little one, make sure you have secured your future. Consider entering into some kind of agreement with them up front along the lines laid out in this post to avoid problems at a later stage. So many families have fallen out over money/property.
 
Yes, you are absolutely right.

Once financing has been sorted for the build I do intend to come to an agreement with my siblings about the house. We've already talked about it and they are fine with the new plans and us living there, but we'll need to agree (in writing) arrangements for the future to cover all eventualities.

I guess it's much like making a will. We're all reluctant to think about it, much less do it, but once it's done, you feel better because it makes sense.

This is a great site! Thanks again.
 
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