At Spry Finance, we know our customers take out a Lifetime Loan for lots of different reasons and we understand that all our customers’ circumstances are different.
Our role is to provide information, help and guidance to ensure our customers understand how a Lifetime Loan (also known as a Lifetime Mortgage) works and whether it is a suitable financial choice for them.
Simply put, a Lifetime Loan is a mortgage secured against your home. You borrow a lump sum using your house as security and can then use the money as required without the requirement to make regular monthly payments unless you want to. We typically see our customers using a Lifetime Loan for four main reasons:
Currently, we are seeing an increase in customers enquiring whether they can switch their existing mortgage to a Lifetime Loan as a way of matching their mortgage requirements to their current and future financial needs.
Recent Central Bank of Ireland data shows that around 82,000 customers currently hold mortgages with Credit Servicers or Non-Lending Retail Credit Firms. Many of these customers are continuing to make repayments on tracker or standard variable rate loans, and up until the middle of last year, had been benefiting from historically low interest rates.
However, in 2023, the landscape for mortgage holders changed dramatically. The European Central Bank increased its base lending rate to 4.00%, making monthly repayments substantially more expensive for Irish mortgage holders with variable rate mortgages. According to the ECB further increases are very likely in July 2023.
This has resulted in a situation where variable rate mortgage customers, many of whom are paying in excess of 7%, have no certainty over their future mortgage costs.
Switching to a Lifetime Loan while not suitable for everyone, is a potential option for some as it can provide certainty over interest rates and help manage payments for those who are eligible. Eligibility is primarily based on a customer’s age (customers must be aged over 60), the value of their property and the equity remaining in their property. As payments are optional, the ability to make repayments and previous credit issues are not a barrier to Lifetime Loans in the same way as they may be for standard mortgages. With no upper age limit, Lifetime Loans provide real choice for those in later life.
All customers should seek independent financial advice and/or talk to a mortgage broker for impartial advice, allowing them to understand what options are most suitable for their individual circumstances.
For example, customers may consider selling their home and trading down, or renting a room in their property to increase income or raise additional funds to clear their mortgage. Where such options are not attractive or suitable, a Lifetime Loan could provide a workable, alternative solution.
The Lifetime Loan application process is transparent and comprehensive and, while it is by no means a “silver bullet” for all, it is a financial product that provides a real option for some later life customers to consider. Most importantly, a Spry Finance Lifetime Loan is designed to help customers to remain in their homes for as long as they wish, while retaining 100% ownership of their property and providing interest rate certainty for life.
For more information on a Spry Lifetime Loan contact us on (01) 5822570 or [email protected]
