When it comes to making the most of life’s golden years, attention often turns first to our finances. After a lifetime’s work, career, and perhaps raising a family, it’s understandable that there are big ticket items on your to-do list to ensure that you have a happy and active retirement.
However, if you don’t already have the cash to fund such needs in retirement an increasingly popular method of financing your later years is to use a Lifetime Loan to convert some of the equity tied up in your home into a cash lump sum. In fact, a recent survey commissioned by Lifetime Loan provider Spry Finance found that a majority of those aged 55 plus believe their children would be supportive of them taking out a lifetime loan to raise a lump sum of €50,000 for retirement. When the children themselves were asked, 70 per cent said they would understand if their parents took out a lifetime loan because it’s their house and up to them to decided what to do with it.
A Lifetime Loan enables customers to borrow against the value of their home while still retaining 100 per cent ownership of it and without having to move out.
Lifetime loans are typically used in several ways, rather than for a single purpose. The recent research undertaken on behalf of Spry Finance found that paying off outstanding mortgages and other debt is one of the two most common uses (alongside home refurbishment). This stands to reason, with figures from the Central Bank highlighting the fact that while the overall number of Irish people aged 60+ has increased by over 50 per cent to over 1 million in the past 15 years, the proportion that have carried significant debts into their retirement has increased at a faster rate.
Replacing an outstanding mortgage with a Lifetime Loan can be beneficial in that it eliminates the need to make ongoing repayments. Other common ways that people spend their funds include making their homes more comfortable and energy efficient, funding specific health and medical care, gifting money to family members, replacing the car, or simply boosting monthly income.
Lifetime Loans are not suitable for everybody but, with expert guidance from Spry Finance, you can find out whether or not it may the right next step for you.
What is a Lifetime Loan?
Lifetime Loans allow older homeowners (60+ in the case of Spry Finance) to borrow against the value they have built up in their property without the need to sell it, trade down, or make monthly repayments. Instead, interest is added to the loan balance, which grows over time, and the loan is not repayable until after the borrower dies or moves out of the property.
A Lifetime Loan enables them to borrow against the value of their home while still retaining 100 per cent ownership of it and without having to move out of it.
Who is eligible for a Lifetime Loan?
In order to avail of a Lifetime Loan, applicants must be aged 60 or over, be resident in the Republic of Ireland, and own their own home. Where applicants are a couple, the younger spouse must be aged 60 or over. Your home must conform to building standards and regulations, and be valued at a certain minimum amount.
How can a Lifetime Loan be spent?
There is no specific purpose for a Lifetime Loan – applicants are free to spend the money as they wish, with many often taking a multi-purpose approach to securing a loan. Home improvements and upgrades are a common motivation, as is paying off a mortgage balance to free up monthly cash flow, or supplementing lifestyle expenses. Lifetime Loans are designed to help you better prepare for the future and to meet your financial needs, whatever they might be, throughout your retirement years.
What key benefits are there to a Lifetime Loan?
Unlocking the value of your home without having to move out of it is the primary benefit of a Lifetime Loan. A regular or monthly repayment is not required, freeing up cash to spend as you need, and the loan only becomes repayable if you sell your home, move from your home into long-term care, or pass away. Another important feature of these loans is that a ‘no-negative’ equity guarantee is included, meaning that you will never owe more than the value of your home, where you are not in mortgage default.
Are there any disadvantages?
The main element of a Lifetime Loan that customers should understand is that the lack of monthly repayments means that interest accrues on the loan over time. This is called compound interest and increases the loan balance until it is repaid. This means that the future value of your equity in your home, available for you or for any next of kin that may inherit the house, will be less than if you never took out the Lifetime Loan.
Why consider Spry Finance?
Spry Finance is part of the Irish-owned Senior’s Money International Group and has over 15 years’ experience in assisting customers across Europe, and around the world, in understanding Lifetime Loans and assessing individual suitability for them. Spry Finance has helped thousands of eligible Irish residents to release equity from their homes – their most valued possession - in order to meet their financial needs in retirement. Spry’s proven track record offers peace of mind that they will professionally guide you through your Lifetime Loan assessment, ensuring that you are armed with all the information necessary to decide whether or not it is the right solution for your circumstances. If it is, Spry will assist you in preparing your application for a Lifetime Loan from their lending division, Seniors Money.
Spry Finance believes that this stage in your life is an important one, and that you deserve to feel financially secure as you progress into your 60s. To find out more about how a Lifetime Loan can benefit you, visit spryfinance.ie.
Warning: While no interest is payable during the period of the mortgage, the interest is compounded on an annual basis and is payable in full in circumstances such as death, permanent vacation of or sale of the property.
Warning: Purchasing this product may negatively impact on your ability to fund future needs.
Warning: Your home is at risk if you do not keep up payments on a mortgage or any other loan secured on it.
Over 60s only. The property must be of standard construction, located in the Republic of Ireland and be worth at least €250,000 if in Dublin or €175,000 if elsewhere. Approval is subject to an assessment of suitability.
Seniors Money Mortgages (Ireland) DAC, trading as Spry Finance and Seniors Money, is regulated by the Central Bank of Ireland.