How your home can help fund a greater life in later life

We’re living longer than ever – but research shows 4 in 10 older people are having to make significant cutbacks to make ends meet

Average life expectancy in Ireland is now almost 83. That’s an increase of more than six years since the turn of the century. We’re living longer than ever – and generally in better health too – so, it’s little wonder that many of us look towards retirement as being our ‘golden years’.

Later life should be a time to savour experiences, fulfil dreams and tick off items on the bucket list. But funding a comfortable retirement isn’t easy, even after a lifetime of hard work. It is not unusual for people to end up asset rich but cash poor in retirement, with much of their wealth tied up in their home and limited options to access credit, while they live on a reduced income and insufficient savings.

Spry Finance Irish Times Article - Lifetime Loans and retirement planning in Ireland

Behaviour & Attitudes research from Spry Finance found that 4 in 10 homeowners aged over 60 are having to make significant cutbacks to manage their household finances – with just 17% stating they were ‘very comfortable’ financially.

Some homeowners choose to downsize to a cheaper home as a way to help fund their retirement – something that 22% of survey respondents said they would consider – while renting out a room in your home is another way to boost your income.

However, an increasingly popular way to raise money is to use a Lifetime Loan to convert some of the equity contained in your home into a cash lump sum.

Over the past two years, more than 1,000 people in Ireland have taken out a Lifetime Loan with Spry Finance – choosing to borrow against the value of their home but without having to move out or make regular loan repayments.

They use this money for a variety of purposes, such as paying off an existing mortgage or other debt, upgrading their home to make it more comfortable and energy efficient, gifting money to family members, funding specific medical needs, spending on a new car or holiday, or simply boosting their savings.

Lifetime Loans are not suitable for everyone, but they are a valuable financial tool for the over-60s, so here are the key things you need to know about them when considering whether they are a good fit for your needs.

What is a Lifetime Loan?

A Lifetime Loan is a form of equity release mortgage which allows a homeowner aged over 60 to borrow, at a fixed interest rate, against the value they have built up in their property without the need to sell it, trade down, move out, or make regular 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. With a Lifetime Loan, the borrower retains 100% ownership of their home.

There are two types of Lifetime Loan available from Spry Finance – the Standard Lifetime Loan and the Green Lifetime Loan. The Green Lifetime Loan is designed for people who have an energy efficient home or who are willing to invest in attaining one. It comes with a reduced interest rate and is subject to certain qualifications.

This article was originally published in The Irish Times.

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