Payment Reward Lifetime Mortgage by Spry Finance
Spry’s Payment Reward Lifetime Mortgage allows you to release money from your home, tax free, or refinance an existing mortgage to make it more manageable, without having to sell your home. You retain full ownership of the property and continue to live in your own home. The key difference between the Standard Lifetime Mortgage and the Payment Reward Lifetime Mortgage is that you are required to make monthly repayments to service the interest for an agreed Payment Reward Period, during which time you will benefit from a reduced interest rate (as shown below). At the end of the agreed Payment Reward Period, customers that have made all the agreed upon repayments will be rewarded with a Second Reward Rate for the remainder of the loan and they will no longer be required to make monthly repayments although you can choose to continue making optional repayments of up to 10% of the original loan value.
Criteria to apply for this product
The Payment Reward Lifetime Mortgage is designed for customers that meet the following criteria:
– Are aged 55 or over, if there are two applicants, the younger person must be 55 of older
– Own a residential property in the Republic of Ireland
– Are resident in the Republic of Ireland
– Own a non-tenanted property
– Want to borrow a minimum of €50,000
For the property to be eligible
– It must be your primary residence
– It must be of standard construction located in the Republic of Ireland
– It must have a minimum value of €225,000 outside Dublin or €300,000 in Dublin
– It must have a maximum of two named owners on the deeds of the property
– If there is an existing mortgage or charge on the property, this must be cleared either from savings or from the proceeds of your Payment Reward Lifetime Mortgage
– It must not be used for commercial purposes
– Certificate of Title must be confirmed by your solicitor
– Home insurance must be maintained at all times on your property
– All local property tax charges must be up to date
How much can I borrow?
The actual loan amount will be determined on a case-by-case basis based on the customer’s age, the agreed Payment Reward Period and the value of the property being put forward for security
– The minimum that can be borrowed is €50,000 up to a maximum of €350,000
– The maximum that can be borrowed in each case is determined using maximum Loan to Value (LTV) ratio based on the age of the youngest borrower, the value of your property and Payment Reward Period you commit to
– If there are two applicants, the amount available will be determined by the age of the youngest borrower
– To gain an accurate value of your property, an independent valuer will be appointed by Spry Finance
Affordability Assessments
Customers’ ability to service the committed monthly interest payments for the agreed Payment Reward Period will be assessed based on the following:
– Current income e.g. Current payslips and up to date P60
– Rent-a-Room allowable income
– Pension income
– Other income
– Credit history
How much will I repay during the Payment Reward Period?
The committed monthly interest payments must be made throughout the agreed Payment Reward Period. The minimum agreed Payment Reward Period will depend on your age and is outlined in the Loan To Value Table above.
– For customers under the age of 60, the minimum Payment Reward Period must take them up to their 60th birthday (i.e. if a customer is 56 the minimum Payment Reward Period will be 4 years)
– For customers between the ages of 60 and 79 years old, a minimum Payment Reward Period of 1 year will apply
– For customers over the age of 79, a maximum Payment Reward Period of 1 year will apply
– Customers may choose to pay more than the committed monthly interest payments. As long as the combined value of the committed interest payments and additional optional repayments do not exceed 10% of the initial loan amount per year, an early repayment charge will not apply
– All payments made after the end of the agreed Payment Reward Period are completely optional
What happens after the Agreed Payment Reward Period?
– No payments are required after the agreed Payment Reward Period
– Once all committed payments were made during the Payment Reward Period, the Second Reward Rate will automatically apply at the end of this period
– Customers retain the option to repay up to a total of 10% of the initial loan amount per year, without incurring an Early Repayment Charge
What happens if I miss repayments?
– Missed committed interest payments during the Payment Reward Period, where they occur, will be added to your loan balance and will be subject to compound interest (as per the standard application of interest to a Lifetime Mortgage)
– Customers will be alerted to any missed committed interest payments during the Payment Reward Period and will be given 3 months within which to make up the missed payments
– Where customers miss (and do not make up) 3 interest payments during the Payment Reward Period, they will forgo the Reward Rate and revert to the Contracted Rate. Where this occurs, customers will not benefit from the Second Reward Rate
– Customers will retain the Spry Finance No Negative Equity Guarantee
– There is no risk to security of tenure (i.e. no payment arrears or risk repossession)
It may not be suitable for customers wh0:
– Can’t commit to making monthly interest payments for the minimum Payment Reward Period
– Have uncertain income to pay the interest over the agreed Payment Reward Period
– Have savings or investments that they can consider using
– Have sufficient long-term income which would mean that they may qualify for a standard residential mortgage
– Are concerned about the effect of reduced equity in their home, from taking out a Lifetime Mortgage or if they fail to make the committed interest payments
– Want to ensure that they retain a fixed portion of the net sales proceeds of their property to fund future needs (e.g. to pass on to their heirs)
No Negative Equity Guarantee
As long as the customer(s) are not in default, Spry Finance guarantees that neither the borrowers nor their estate will ever have to repay more than the net sales proceeds of their property even if the loan balance (loan plus accumulated interest and charges) exceeds the net sale proceeds of the house.
Advice
Your MyMortgages.ie advisor will advise you on the suitability or otherwise of a Payment Reward Lifetime Mortgage for meeting your financial objectives.
We strongly recommend that you seek independent financial advice from a qualified source about any possible effect that a Payment Reward Lifetime Mortgage could have on any means-tested State benefits and other related matters. You must get independent legal advice from a solicitor. We strongly recommend that you discuss your intention to apply for a Payment Reward Lifetime Mortgage with your family.