Second Home Lifetime Loan by Spry Finance
Spry’s second home lifetime loan allows you to release money from your second home, tax free, without having to sell it. You retain full ownership of the ownership and continue to enjoy the benefits of the property. You have the option to make monthly repayments if you want t. If you choose to not make repayments, the loan will usually be repaid from your estate, when you move into long term care or on the sale of your property.
Is the Second Home Lifetime Loan a Lifetime Mortgage?
While it technically doesn’t meet the criteria to qualify as a Lifetime Mortgage under the Consumer Protection Code, it operates in almost the exact same way. The main difference between a Second Home Lifetime Loan and a Lifetime Mortgage is that it is secured against a property that is not the borrower’s primary residence. As a result, borrowers and/or their family members will not have the right to permanently reside in the property when it comes time to repay the loan if the loan is being repaid with the funds garnered from the sale of the property. All other protections provided to customers of our standard Lifetime Mortgage will apply to customers of the Second Home Lifetime Loan.
Who is it suitable for?
Spry’s Second Home Lifetime Loan is designed for customers who:
– Are 60 years old or older, if there are two of you, the younger applicant must be aged 60 or older
– Own a residential second (non-tenanted), private property in the Republic of Ireland
– Are resident in the Republic of Ireland
– Want to borrow a minimum of €50,000
– Maintain the up-keep of their property and visit it on a regular basis
It may not be suitable for customers in the following circumstances
– If you intend to sell the property in the short to medium term and/or transfer the property to a family member or close relative in the short to medium term
– If you intend to rent the property on a long-term basis or use it for commercial purposes
– If you use the property or intend to use the property as their principal private residence
For your property to be eligible
– 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
– It must be mortgage free. If there is an existing mortgage or charge on the property, this must be cleared either from savings or from the proceeds of your Second Home Lifetime Loan
– It must not be used for commercial purposes
– However, it may be let on a short-term basis for up to a maximum of 8 weeks total per year
– Certificate of Title must be confirmed by your Solicitor
– Home Insurance must be maintained at all times on your property
– All local property charges must be up to date
How much can I borrow?
The amount you can borrow is determined by your age and the value of your property – as shown on the table below
– Customers aged 60 may borrow up to a maximum of 15% of the value of their property
– Customers over 60 may borrow one additional percent for every year of age up to a maximum of 40% for those aged 85 and older. (i.e. If you are 61 you may borrow up to a maximum of 16%, if you are 62 you may borrow a maximum of 17% and so on)
– An adjustment to the maximum loan size will be made for any potential future Capital Gains Tax Liability – This will be agreed with you on application
– In order to gain an accurate value of your property, an independent valuer will be appointed by Spry Finance
– Confirmation of the original acquisition price of the property will need to be provided by your Solicitor
Calculation of the Second Home Lifetime Loan amount
The maximum loan size is determined by using a maximum Loan to Value Ratio (“LVR”) according to the age of the younger nominated borrower.
Second home properties may attract Capital Gains Tax, on any future gain associated with your property. Such tax can impact on the maximum loan size of the Second Home Lifetime Loan.
Confirmation of the original acquisition price of your property will need to be provided by your Solicitor. To the extent that there is a potential Capital Gains Tax liability, we will adjust the Maximum Loan Size accordingly.
Loan Limit means the percentage of the property’s value (adjusted for current Capital Gains Tax) that can be borrowed
Interest Rate
The interest rate of a Second Home Lifetime Loan is 7.20% per annum fixed rate, added to your loan monthly. This rate may change before the loan is drawn down. Loan offer is valid for 30 days.
Optional Repayments
You can chose to pay up to 10% of the original loan amount per year to service the interest and manage the balance of your loan amount without incurring an Early Repayment Charge (ERC) should you wish to.
– You can do this by making regular monthly direct debit repayments or by electronic payment
– Payments in excess of 10% of the original loan balance per may result in an ERC
Full details of the ERC are provided in the Spry Finance Guide to a Lifetime Mortgage/Lifetime Loan, including details of exemptions to the ERC.
Advice
MyMortgages will advise you on the suitability or otherwise of a Second Home Lifetime Loan for meeting your financial needs and objectives.
We strongly recommend that you seek additional financial advice from a qualified source about any possible effect that a Second Home Lifetime Loan could have on any means-tested State benefits and other related matters.
You must seek independent legal advice from a Solicitor.
We strongly recommend that you discuss your intention to apply for a Second Home Lifetime Loan with you family.