Key Post Spry Finance Lifetime Loans

Brendan Burgess

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I find the Spry Finance website complicated so this is my summary of it.

If you are at least 60, you can take out a Lifetime Loan from Spry Finance. There are no other providers in the Irish market which is a pity.

You do not have to make any repayments, they will roll up the interest.

The interest rate is fixed for the duration of the loan - it is currently 6.7% (or 6.5% if you qualify for a Green rate)

The maximum you can borrow is set out in the following table. If a couple owns the house, it is the age of the lowest person which counts.

 
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Early repayment charge applies in the following circumstances:

You can repay the interest as it arises if you wish.

You can repay up to 10% of the original loan balance each year without an early repayment fee.

After 10 years, there is no early repayment charge.

If you repay more than 10% of the original balance within 10 years, you may face an early repayment charge.

This is calculated by a complex formula. As a general guide, if interest rates have risen since you took out the mortgage, there will be no early repayment charge. If interest rates have fallen, there will be an early repayment charge.
 
When is the loan repaid?

When the person dies.

When the person moves into a nursing home.

In these events, there is no early repayment charge.
 
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Other points

There is a "No negative equity" guarantee. In other words, if you live for a long time and pay no interest and house prices fall, your family won't have to pay anything.

You can trade down and, in most circumstances, transfer the loan to the new property.
 
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Alternatives to a Life Loan

A Life Loan is expensive.

A typical home loan mortgage rate is about 4.5% compared to 6.7% for a Life Loan.

So if you need money, can your children lend it to you? It would make sense for them to remortgage their own home at 4.5% instead of you paying 6.7%.

You can pay the interest as it arises

One of the criticisms of the Life Loan is that

€100,000 @6.7% over 11 years with the interest rolled up amounts to €204,000!

There might be nothing left for the kids.

But if you or the kids pay the interest every year as it arises, then after 11 years, you will owe exactly €100,000!
 
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Lifetime loans and means-tested benefits

The Contributory OAP and Widow's Pension is not affected by the Life Loan.

If you are receiving a means-tested benefit such as the Non-Contributory State Pension and you have a lump of cash, it would affect the amount of pension you get.

Lifetime Loans and the Fair Deal Scheme

If you take out a Lifetime Loan and later move into a nursing home, you will have to sell your home. The amount of cash you have left will affect the amount you have to pay towards your nursing home care.

If you need the cash now and are not imminently moving into a nursing home, then this should not be a factor in your decision.

This guy recommends against taking out Lifetime Loans, but I don't agree with such a blanket dismissal

Life Loans And Their Implications On Long Term Care Funding

At Fair Deal Advice we from time to time come across older persons looking to apply for the Fair Deal who have previously taken out Life loans.
fairdealadvice.ie
 
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We have been quoted a standard €2000 + VAT (€2,460) by a solicitor to process the application for the spry standard liftime mortage. Is that reasonable or does anyone know of a recommended solicitor that is more economical?

Spry is so common I imagine there may be a solicitor completely optimised for / specialising in Spry applications which might allow them to process them for a lower fee.
 
Hi David

You raise an interesting point which I had not considered. I asked two solicitors and one suggested a fee of €2,000 without my prompting. The other was reluctant to get involved with doing these and so thought a fee of €2,000 was reasonable as well.

The problem is that they need to spend a lot of time explaining the full implications of the loan to the borrower, who is always at least 65 years old and so would be potentially classified as "vulnerable". And even if they get a written acknowledgment from the client that they full understand the implications, there is always the likelihood that after 20 years, the children will complain that their inheritance has been greatly diminished by this loan and that they were not informed of it and this could waste a lot of time for the solicitor.

I think that they are a great product and it's a pity that some solicitors are reluctant to do them but I fully understand that it's just not worth the potential hassle.

Brendan
 
@ClubMan, this is fantastic, thank you!!! many threads recommending Direct Law Solicitors in Skerries (close enough to me) so I'll give them a buzz! Thanks again, much appreciated
 
The rate is high anyway.

APR is useful for comparing two comparable loans e.g. AIB and BoI.

If you take out a Life Loan, you are paying a high rate anyway.

It would be useful if another lender entered the market.

Brendan
 
Thanks a lot for that Brendan! I tried to reply previously but it seems this forum limits to one reply eveey few hours as I'm a new registrant.

I never for a moment considered they wouldn't want the business so that's an eye opener.

Spry advertisements are never off the tv and radio so I had assumed they were blanketing the market with this product and very common!

I spoke with a Spry consultant about an hour ago and they said recent customers got it done for €1500 incl vat and they'll pass on the details to me.

I'll do a bit more digging and report back how I go. Thanks again!
 
david103 said:
Thanks a lot for that Brendan! I tried to reply previously but it seems this forum limits to one reply eveey few hours as I'm a new registrant.
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can't post a reply to my thread (or with long delay)

Hello, I'm new here, I created a thread yesterday. This morning I received some replies but when I want to reply myself I get a message "you must wait at least 7234 seconds before performing this action". That's like 2 hours. The first time I waited, but it happened again, why? It's holding up...
www.askaboutmoney.com
 
I'm single, 55, I'm planning my retirement from corporate as soon as I can.

My home is worth around 490,000 so I'd be leaving it to them.

My Pension is poor so I'm considering factoring in something like a Lifetime Loan.

Is it worth considering for someone in my position.
 
Secondtimer said:
Is it worth considering for someone in my position.
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Impossible to say without much more information about your overall financial/personal circumstances such as would be provided by a Money Makeover post.

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...
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