Unlock wealth in your home without moving out – or making repayments

Older people are unlocking wealth tied up in their homes to do all sorts of things from energy upgrades to buying a holiday home – or even get a divorce. So says IAN HIGGINS, CEO of Home Plus, a company that offers to buy a portion of your home. The practice is controversial as it eats into the family inheritance, yet many people are using the money to give a deposit to their children to buy a home. Ian tells us all about it – and his own financial story.

Do we have a problem with older people living in poverty?

In my view – and our own research supports this – we have a huge silent and stoic older population who are living on fixed incomes and in very tough situations, especially with rising gas and living costs.

So you do home reversions. What are they? And how can they help?

You can get a lump sum by selling us a share of your home. You never repay any money we give you and typically it’s tax free.

How much do homeowners sell?

The equity shares to date ranges from between 27% and 74%.

What do they do with the money?

They respond to a financial challenge, for example helping children get on the property ladder with a deposit; a once-in-a-lifetime holiday; settling out residual mortgage debt; buying a holiday home abroad; resolving a divorce while keeping the family home; renovating a property; energy efficiency upgrades, and many more.

How do I know I get a fair price?

We get an open market valuation on the house which you get a copy of, and we use Irish life expectancy tables. It is all available and transparent – we insist you get financial and independent legal advice and the share of the property we buy doesn’t change normally during the plan.

What are the pros and cons between this and a ‘lifetime loan’?

In a lifeloan, they lend you money secured on the property and there is a compounding interest rate, so if the value of the property drops you can lose all value in your home. With the Home Plus product, we agree the share we buy upfront, you can stay in the property for the whole of your life, and we bear the risk of property prices rising as well as falling. If house prices went the way they did in the last 15 years you would be in better position with us. We can also give you far more than you might be able to get with a lifeloan.

But if house prices keep soaring, I presume the lifetime loan option

could work out for many people by compensating for the fairly high interest charged on it?

You’re correct that if house prices soared and the rate of increase was higher than the interest rate on the lifeloan then it could be the better option. But two things to think about: according to the last 15 years of data, house prices on average only went up 1.86% yearly – far less than the typical rate of a lifeloan in Ireland – and you are asking an older person to run the risk of house price inflation for the rest of their lives. If the market moved like it did over the last 15 years since 2005 over the next 15 years then a home reversion should outperform a lifeloan and give certainty as to the share being forgone by the homeowner.

So how much do people get?

On average for a 73 year old, Home Plus would buy 50% of a €300,000 home and pay up to €84,000 with a monthly payment of €150p/m.

What happens if I have to go into a nursing home – does this conflict with the Fair Deal scheme?

No. We actually already have had deals on our books where Fair Deal has been procured. Under the recent changes to legislation, you would simply be assessed as normal but with your share of the family home being the value attributable to the family home as Home Plus owns the remaining share.

What did you parents teach you about money?

It’s hard to make and easy to spend.

What was your first job?

At 12, I worked in Kingston’s Hardware on Pembroke Street in Dublin. My grandfather was a painter and decorator. He got me the job as a favour – and I loved it!

Best and worst investments?

Best – my wife. Worst – a classic car which just never worked!