Lifetime loan provider Spry Finance cut its fixed interest rate, extending the reduction to existing customers amid better-than-expected loan volumes.
The company, which is a retail division of Seniors Money Mortgages, resumed lending in January. He said he has processed thousands of requests in recent months.
Interest rates were reduced from 5.5% to 4.95% effective July 1. The company is also extending the reduced rate to customers who have taken out loans with Spry since January, as a gesture to its first customers.
Spry Finance chief executive John Moriarty said the company anticipated a level of pent-up demand but was unsure of what to expect.
“The first six months of operations have been busier than expected and we already have a pipeline of almost € 60 million of loan investigations, which is higher than we had envisaged all the more that it happened in the teeth of the Covid pandemic, “he said. noted.
“We are delighted with the response and the traction we have gained. The positive adoption has allowed us to refine our funding model as we look beyond the pilot phase and implement the new reduced interest rate.
Lifetime loans allow elderly homeowners to borrow against the value of their property without the need to sell, trade, or make monthly payments. The interest rate is fixed for life, the amount that homeowners can borrow based on their age and the value of the home.
Interest is added to the loan balance and the loan is repaid after the borrower dies or the property leaves. Loans can be used for a variety of purposes including home improvements to make homes more comfortable and energy efficient, paying off a mortgage balance or other debt to free up monthly cash and reasonable lifestyle expenses.
“Today’s clients also bring their own more sophisticated approach to the decision-making process, many of whom are referred to us by their accountant or professional financial advisor. The family home remains the most important asset of most of this age group, and it is generally believed that a life loan allows them to release some of the value attached to it, but they remember the lessons from the financial crisis and are constantly disciplined. to determine whether or not they should take out a loan, what exactly they need and how much it makes sense to borrow, ”Mr. Moriarty said.
Research conducted by Spry Finance by market research agency Behavior & Attitudes before the company launched its products indicated that those over 60 wanted to stay in their homes and retain full ownership.
“Comments from this year’s candidates suggest that this age cohort has little interest in downsizing for various reasons and strongly prefers to ‘age in place’, preferably in comfort, hence the decision to apply for the ready, ”Mr. Moriarty said.
The news comes as a company goes into business as Home Plus plans to launch a return-to-home product for the first time in the Irish market since the financial crash.
This is where older people can sell part of their home in exchange for a lump sum or monthly payment and a right of residence for life.
Unlike discharge loans, where the client retains ownership of the home in exchange for a mortgage with accrued interest that must be settled, usually through a sale after the borrower’s death, reversion of the home involves the sale. of a participation in a house.
However, this is usually a number well below its current market value.