So, when the paint starts to look a little dull, or the kitchen a tad outdated, equity release could provide you with the means to make those home improvements you’ve been thinking of and show your home the love it has always shown you.
Equity refers to the value of your asset after you have paid the debt on it.
Let’s say the market value of your home is €500,000. You owe €100,000 in mortgage. The equity in your home is €400,000.
Equity release simply means releasing a portion of the wealth tied to your home without selling it. The lender gives you a lump sum amount that you can use for any purpose, including home improvements.
It’s important to remember there are alternatives to equity release that you can use to finance home improvement projects. We’ll discuss those later.
Equity release may be suitable for you if do not want to move into a new home or sell your existing one. Instead, you may want to repair or remodel the one you’re currently living in. Releasing a tax free lump sum against the value of your home frees up cash which you may choose to use towards larger building projects. We recommend you investigate all sources of alternative funding in this case.
If leaving behind the total value of your home to family and friends isn’’t a priority. Equity Release could be an option for you.
You must follow a few requirements to be eligible for an equity release on your home. Here are some of them.
It is a condition of a Lifetime Loan that you maintain it in good condition. Spry Finance may conduct periodic home inspections to ensure you follow home maintenance guidelines.
If your home is selected and it is found to be in need of essential repairs, you will need to be requested to carry out essential repairs in order to maintain the property to a reasonable standard. You will have 12 months to carry out these repairs.
If not completed within this period, Spry Finance will assist you in arranging for these repairs to be carried out and add the cost of these repairs to your loan.
Spry Finance conducts a Customer Fact Find during the consultation to see if equity release may be suitable for the customer.
A Lifetime Loan allows you to borrow a certain percentage of your home’s value. It comes with a fixed interest rate for life.
For clarity, you’re not selling a share of your property. Instead, you’re borrowing money, keeping your home as a security. You still completely own your home and can live in it for as long as you want.
A Lifetime Loan does not require regular payments, however you may choose to make optional repayments to help manage the loan balance. The loan is repayable upon the borrower’s demise, the property’s sale, or when the borrower stops living in the property permanently.
A No Negative Equity Guarantee protects homeowners to ensure they never owe more than their property’s value. If you adhere to the loan’s terms and conditions, you will not have to make repayments worth more than the home’’s value. That holds true even if the loan and accrued interest on the property are higher than its net sale value.
Spry Finance is the sole provider of Lifetime Loans in Ireland. The provider has the following requirements:
A Lifetime Loan from Spry Finance delivers a fixed interest rate. If you repay your loan before the required timeline, an Early Repayment Charge (ERC) could arise.
An ERC is triggered when you repay all or some part of your loan within 10 years of getting the equity release. The ERC will apply to the remaining period within the decade. For example, if you pay a loan 7 years after taking it out, the ERC will apply for 3 years.
After the 10-year mark, homeowners are exempt from this charge. Homeowners aged 78 or more are exempt from ERC after their 88th birthday.
For example, if a homeowner is aged 81 when they take out a Lifetime Loan and pay it back 4 years later at the age of 85, they will only have to pay the ERC for the 3 years leading to their 88th birthday instead of 6 years, as a younger applicant would.
Although regular payments are not required, homeowners can make optional payments to manage their loan balance. You can make regular monthly payments to the lender. Or, you can repay up to 10% of the loan amount annually without any Early Repayment Charges.
The equity release process begins with the application and consultation. You will first meet with a Spry Finance customer consultant who will:
In the follow-up consultation, you will bring your filled application form along. The consultant will submit this form for loan approval.
Note that the consultants do not offer legal or financial advice. They only explain the product’s features to you. It is your responsibility to the risks and benefits before moving forward. If you have any concerns regarding this, then we recommend you seek independent third party financial advice from Financial Advisor or Mortgage Broker.
After you submit your application, Spry Finance will value your property and make a formal offer. At this point, you can hire a legal adviser to go over the Lifetime Loan agreement. The legal adviser will check that you understand your rights and obligations under the contract.
If you accept the loan offer and it’s approved, your solicitor will receive the funds and transfer them to your account.
Once you get the equity release loan, you can use the money to make different types of home improvements. You may build a new bathroom or a kitchen. Or you could renovate and remodel your existing ones, it is up to you.
Many homeowners also use the money to make their homes more eco-friendly. Installing solar panels is a good option. A Spry Finance Green Lifetime Loan can help you live a greener life later in life.
However, if you lease your solar panels, the lease conditions must be acceptable for Spry Finance. You’ll be required to submit your lease agreement in the loan application.
Equity release is a good option if you need a large sum for home improvements, but it’s not the only option. Here are some alternatives:
The key is to consider all your options before you choose equity release. You should also discuss the option with your family, especially your children.
The minimum loan you can get in Spry Finance’s Lifetime Loan is €20,000. As for the maximum amount, it depends on your age and property value. The maximum amount you can borrow increases with your age.
You cannot borrow more than €500,000, regardless of age or other factors.
When you apply for an equity release Lifetime Loan, you are not automatically entitled to additional lending later. If you wish to borrow more money later, you must submit a new application. You also go through the assessment process again.
Summing up, equity release has its pros and cons. On the plus side, you may be eligible to release a lump sum for home improvements without worrying about repayments, if you choose not to make any repayments.
The downside is the reduction of the amount passed down to beneficiaries. In a Lifetime Loan, the interest adds up over time. The loan is repaid upon the last borrower’s demise or transition to long-term care. It could reduce the amount of wealth passed down to other family members.
It’s essential to understand the pros and cons of equity release and that is why at Spry Finance we recommend you seek independent financial advice and talk to your family and friends. We are happy to send you out our customer brochures. If you would like more information about our Lifetime Loan enquire here »
You will never owe more than the value of your home. This is a guarantee to the borrower and forms part of the contract.
As long as you are not in default neither the borrower nor their estate will ever have to repay more than the net sale proceeds of their property
Find out more
If you want to take things further, we will work with you to build a clear picture of your own personal needs and whether or not a Lifetime Loan is suitable.
We will guide you through the process, telling you exactly how it all works.
The first step is to get in touch with us.