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EQUITY RELEASE MORTGAGES

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What is an Equity Release Scheme?

Equity is the difference between the current value of your house and the amount you owe on it. For example, if your home is worth €400,000 and your mortgage is €100,000, then you have equity in your property of €300,000.

If you own your home, an equity release scheme could allow you to release some of the value of your home without having to make repayments during your lifetime, move out or sell your home on the open market. The conditions of equity release include that you cannot have an existing mortgage on your home and that you have reached a certain age, for example 60, to avail of the loan.

What is a Lifetime Loan?

A Lifetime Loan is another name for equity release.

A Lifetime Loan allows people over 60 to release value from their homes, at an interest rate fixed for the duration of the loan. It is a valuable financial planning tool for people aged 60 and over who own their own home and wish to release a lump sum from their asset.

At the moment, Spry Finance are the sole provider of Lifetime Loans in Ireland.

Equity Release Mortgage FAQs

What is an Equity Release Mortgage?

An equity release mortgage allows homeowners typically over the age of 55 to access the equity (cash) tied up in their home without the need to move. There are two main types: lifetime mortgages, which involve taking out a loan secured against your home, and home reversion plans, where you sell a part or all of your home in exchange for a lump sum or regular payments.

How Does an Equity Release Mortgage Get Repaid?

For lifetime mortgages, the loan and accrued interest are repaid from the sale of your home when you die or move into permanent long-term care. For home reversion plans, the provider owns the portion of your home you’ve sold, so there’s nothing to repay, but the amount of your estate that goes to your heirs is reduced.

Are There Any Restrictions on How I Can Use the Money from an Equity Release Mortgage?

Generally, there are no restrictions on how you can use the money you release from your home. People commonly use it to supplement retirement income, renovate their home, pay off existing debts, or help family members financially. However, lenders may have specific conditions, so it’s important to check.

What are the Risks Involved with Equity Release Mortgages?

Equity release mortgages can diminish the value of your estate, affecting the inheritance you leave to your heirs. The interest on a lifetime mortgage can compound quickly, increasing the total amount to be repaid. It’s also important to consider how releasing equity might affect your eligibility for means-tested benefits. Always seek advice from a financial advisor who can outline the specific risks based on your personal circumstances.

Can I Move House if I Have an Equity Release Mortgage?

Most equity release schemes are portable, meaning you can move to a new property subject to the new property being acceptable to your provider. However, if you downsize, you might need to repay part of your equity release mortgage. The terms can vary between providers, so it’s crucial to understand the specific conditions of your equity release plan.

 

What is a Lifetime Loan used for?

A Lifetime Loan is most commonly used for 4 main reasons:

  1.     Cash fund for lifestyle maintenance and ‘rainy day fund’
  2.     Re-financing loans eg. mortgages & other debts
  3.     Home improvements/purchases for the home
  4.     Cars and holidays

Note: You still own your home
The borrower continues to own their home, and the loan becomes repayable when the property is sold or within 12 months of the borrower’s death.

Lifetime Loan.png-min

Like a mortgage, a lifetime loan is a type of equity release. It enables homeowners 60 years of age and older to use their house as security to borrow from or “release” a tax-free lump sum of cash.

Key Features of a Lifetime Loan

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  • Loan Amount: The amount you can borrow typically depends on the value of your home and your age at the time of application. Generally, the older you are, the more you can borrow.
  • Interest: The interest on a lifetime loan may either be fixed or variable, but it accumulates over time, adding to the total amount that will eventually need to be repaid. Unlike a conventional loan, you usually don’t make monthly repayments. Instead, the interest is ‘rolled up’ or compounded, meaning the total amount owed can grow quickly over the years.
  • Repayment: The loan and the accumulated interest are usually repaid from the sale of your home when you pass away or move into permanent long-term care. In some cases, you can make repayments during the term of the loan, but this is optional and depends on the terms set by the lender.
  • No Negative Equity Guarantee: Many lifetime loans come with a “no negative equity guarantee,” ensuring that you (or your estate) will never owe more than the value of your home when it is sold, even if the debt has grown to exceed this value.

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Marcin Trawinski
Marcin Trawinski
2024-06-20
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2024-06-13
We are very impressed with the service provided by Billy Dore . Billy found a mortgage product with a competitive interest rate that suited our needs. His dedication and expertise were evident throughout. He also provided detailed instructions, chased the conveyancer, and kept us updated with clear timelines. They made the process swift and stress-free, which we needed. We highly recommend The Mortgage line for their outstanding service. Thank you, Billy Dore and the entire team.
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2024-05-29
Thank you so much to the MortgageLine team, and especially to Mayur, for facilitating the mortgage and other insurances for my house in Lucan. Mayur has been very patient and professional in answering my novice questions and he always made sure that I understood the details correctly. I wish all the best to you and your team.
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2024-05-29
Can’t thank enough. Mayur had been really helpful from start to end. Entire process got completed within 4-5 weeks time. At every step I had received a call from Mayur to go over the mortgage journey. It was worth every single penny spent and will be coming back should I need to switch the mortgage in the future. Thank you Mayur and Mortgage line for all your support!
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2024-05-21
Kevin and his team at Mortgage Line provide a service that is so good, I almost want to start another mortgage. Jokes aside, I highly recommend them to anyone looking for professional advice when applying for a mortgage.
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2024-05-14
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2024-05-09
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2024-05-08
I have been a client of mortgageline for the past couple of years since I was going buying a house to starting a self build The staff are very friendly and respond quickly to any questions I was able to get AIP quickly for all mortgages The only negative thing I can say is that the self build mortgage took around 6 months to reach the loan offer stage and I am still unsure where the source of the delay is… Apart from the is hiccup I got the highest mortgage possible as a single person and was given mostly good advice throughout
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2024-05-07
Mortgage line is for sure better than 5 star service. It would be hard for anyone to believe that from application submission to approval it took me 8 working days in total all due to continuing efforts of Kevin. He’s Definitely one person I would remember always for making my 1st home mortgage approved all according to my plans. Thanks a lot, it’s highly appreciated and recommend.

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