To future-proof their house, maximise pension contributions and pay off a high-cost unsecured debt
Emily and Conor have raised their family and put their children through school and college.
Emily and Conor are 56 and 55 years old. They have grown up children and have lived in their home in Wicklow for 26 years. It’s worth €600,000.
Emily and Conor have raised their family and put their children through school and college. Now they want to focus on improving their home to make sure they’re comfortable in later life. They also have a small unsecured loan they want to pay off and, having discussed the matter with their financial advisor, they have decided to borrow €150,000.
Emily and Conor want to stay in their home for as long as possible. Now their children are grown-up and likely to leave home soon, they’re looking to future-proof their home so they can maintain a good quality of life and set themselves up for the next phase of their life. They’re both still working (Emily part-time and Conor full-time), and are keen to maximise their pension contributions to provide financial security in retirement.
How the Spry Finance Payment Reward Lifetime Mortgage can help:
The Spry Finance Payment Reward Lifetime Mortgage is a loan, secured on a residential property, available to those aged over 55. This is ideal for Emily and Conor, who are not old enough to be eligible for Spry Finance’s other Lifetime Mortgage products, which are only available to the over 60s.
As part of the terms of the Payment Reward Lifetime Mortgage, customers commit to making monthly interest payments for an agreed Payment Reward Period, and are rewarded with a reduced interest rate, or Reward Rate.
At the end of this Payment Reward Period, assuming all payments have been made, the customer becomes eligible for a second discounted interest rate which is fixed for the remaining life of the mortgage. As with a standard Lifetime Mortgage it only becomes repayable on the death of the customer or if they sell the property or move into long-term care.
In Emily and Conor’s case, they began by looking at different mortgage options from banks and other lenders, but these all required high monthly repayments, which didn’t leave them with the cash they wanted to maximise tax relief on their pension contributions. With a Payment Reward Lifetime Mortgage from Spry Finance, however, they can commit to making interest only payments for a Payment Reward Period of between 5 and 10 years, which will take them up to retirement. Following which, they have the flexibility to continue making repayments to manage their loan or they can choose to stop making payments and any interest will be added to their loan balance.
By choosing the Payment Reward Lifetime Mortgage they can:
COMPLETE HOME IMPROVEMENTS: They can access the funds they need to complete much needed improvements and future proof their home for later life.
PASS THE AFFORDABILITY TEST: We will assess their affordability based on their ability to make interest-only payments throughout the agreed Payment Reward Period. Once they have the capacity to make these payments, they will benefit from the reduced reward rates, a key feature of the Payment Reward Lifetime Mortgage. If, due to unforeseen circumstances, they later cannot make all agreed interest-payments, missed payments will be added to the loan balance and a higher Contracted Rate will apply. There is no risk of payment arrears or risk of repossession.
RELEASE EXTRA CASH: They can use some of the loan to clear their existing mortgage and personal loan and still have funds over to set themselves up for the next phase of their life.
HAVE FLEXIBILITY FOR THE FUTURE: After the agreed Payment Reward Period, Emily and Conor no longer have to make any payments. However, they can choose to make optional repayments of up to 10% of the original loan amount per year to manage their loan balance without incurring an Early Repayment Charge if they wish to.
HAVE MORE CERTAINTY: Fixed interest rates, both during and after the Payment Reward Period will provide Emily and Conor cost certainty over the lifetime of the loan. All three interest rates (i.e. Reward Rate, Second Reward Rate and Contracted Rate) are fixed and will be agreed with Emily and Conor before taking out their loan.
LONG-TERM SUSTAINABLE SOLUTION: This may be the last mortgage Emily and Conor will ever need. Once the Payment Reward Period ends, they will no longer have to make repayments unless they choose to do so. As with a standard Lifetime Mortgage, the remainder of the loan will usually be repaid on the death or move to permanent long-term care of the customer(s).
This case study is for illustration purposes only. It is not a real customer example.
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