Senior’s Equity Release Donegal, Ireland

Assuming there is equity in the property, i.e., the value of the property is greater than the mortgage outstanding, it is a financial solution that allows homeowners to raise money from their property as a lump sum.

A Lifetime Loan is a mortgage loan secured against your home. You do not sell a share of your home. You borrow a cash sum using your house as security. You can use this money as you wish. This type of loan is designed to last for the rest of your life. There are no regular repayments to be made. It becomes repayable if you sell your home or after you die or permanently cease to reside in your home.

Fees and Costs

Lender fees and charges payable to your lender

Set-up Fee: €1,500 – Applies to all new loans.

This fee covers the cost of an independent property valuation (€180) and a contribution to the costs incurred by Lender in arranging your loan (€1,320).

You can choose to pay the Set-Up Fee by cheque OR the fee can be included in your Lifetime Loan (and deducted from the amount being borrowed when the funds are paid out to you). If you decide to include the fee in your Lifetime Loan you are borrowing the fee, and the part of your loan balance associated with the fee will grow over time (assumes fixed interest rate of 6.45% p.a. throughout the life of the loan):

Loan Variation Fee: €500 – Applies to all variations.

Payable for any variations during the life of the loan, e.g. adding or removing a borrower, changes to the registered security or title, etc.
You will also be liable for any 3rd party costs incurred by the lender when any variation is required during the loan (e.g. legal fees). The 3rd party costs will be calculated at the time of the variation, and we will provide you with details of these costs at the time.

Loan Redemption Fee: €100 – Payable upon full repayment of the loan
This fee contributes to the costs arising when discharging a loan, e.g. legal or registration fees incurred by your lender in redeeming the mortgage.

Early Repayment Charge (“ERC”)
Because this is a fixed rate product, if you make any loan repayments before you are required to, this will lead to unexpected costs for your lender. An Early Repayment Charge (ERC) may arise if you repay some or all of the loan within 10 years of taking it out.

Other costs

In addition to fees payable to your lender you will be responsible for agreeing and paying any fees your own solicitor will charge for providing advice to you. If you engage a financial advisor, they may also charge a fee for their advice.
In all cases this will include their fee for providing independent legal advice to you on the loan you are entering into.
Where relevant, additional legal fees may arise, e.g. separate independent legal advice for a person not on the title deeds or for an occupier who will not be one of the two nominated residents.

You should contact a Trusted Financial Advisor in the first instance, they will discuss all possible options and help you decide whether a senior’s equity release type plan is the best option for your individual circumstances.

The cash lump sum depends on just 2 factors: your age(s) and the current open market value of your property. 
For example if you are 60 you may borrow 15% of the value of the property but if you are 85 or older you may borrow 40%.

We have found through our experience this is influenced greatly by your choice of solicitor. Subject to you appointing a solicitor who is experienced in Senior Equity Release Plans it is possible to receive your money within 16-20 weeks of application.

The funds are yours to do with as you wish

If you have a current mortgage or any legal charge on the property this would need to be paid off from the money released, your solicitor will discharge this on the way through.

There is no tax to pay on funds raised from the value of your principal private residence, but if in doubt you should seek independent tax advice.

There are some upfront costs which are laid out in detail as part of your full quotation. These may include the cost of your independent solicitor and property valuation amongst other items.

No, you need to engage a financial advisor, you can deal directly with the providers. But as with any mortgage we do recommend you discuss your options with a Trusted Financial Advisor, who will look at all options.

Yes. As with any mortgage you must take independent legal advice when taking out a senior equity release plan and engage a solicitor on your behalf to complete the lending

Yes. You can choose your own solicitor to represent you when taking out a senior equity release plan. If you don’t have a solicitor, we can provide you with a recommendation.

Yes, as with any mortgage your retain ownership of the property.

The loan becomes repayable 12 months after you die or cease to reside in in the property. Unless there are other sources of funds to repay the loan, your home would have to be sold. The sale proceeds, after legal and selling costs have been deducted, will then be used to repay your outstanding loan balance.

When your property is put up for sale, your lender must be notified of the sale price. If the sale price, less expected legal and selling costs, is likely to be lower than the outstanding loan balance, the lender may insist on a second, independent valuation at its cost. In the event of a dispute, a mediation process will be followed.

If you entered into the plan with a spouse or partner, upon the death of the first plan holder, you should let your lender know and send them a copy of the death certificate, so they can update their records. Upon death of the “last homeowner” the executors of your estate need to notify your lender and provide them with details of the solicitor dealing with the Estate. They will arrange for the property to be valued and placed on the open market. Once a sale is completed the proceeds will clear the outstanding balance of your loan.

Generally, you don’t make monthly repayment to this plan. But you can choose to make repayments up to 10% of the amount owed in that year.

Because this is a fixed rate product, if you make any loan repayments before you are required to, this will lead to unexpected costs for the lender (Seniors Money). This may trigger an Early Repayment Charge

An Early Repayment Charge (ERC)

An Early Repayment Charge will only then arise if you repay some or all of the loan within 10 years of taking it out. Even then an ERC will only arise if interest rates are lower than when the loan was taken out and if you are not eligible for one of the exemptions described below.

In such circumstances, an ERC may arise if you:

• repay more than 10% of the original loan balance in any one year within 10 years of taking it out  or,
• voluntarily repay the full loan balance within 10 years of taking it out

Time limit to ERC

The ERC only applies to repayments made during the first 10 years*.

• Any repayments made after 10 years are exempt from an ERC
• For repayments made within 10 years, the ERC only applies to the remaining period to 10 Years

Example: A loan repaid 6 years after taken out will incur 4 years of ERC

*If you are aged 78 or older when the loan commences, no ERC will arise after your 88th birthday. For example, if you are aged 80 when the loan is taken out and repay it 3 years later, the ERC would only apply to the remaining 5 years to your 88th birthday.

No ERC if interest rates are higher

No ERC will arise if interest rates when the repayment is made are higher than when the loan was taken out. This is determined by comparing:

– A The 10 year Irish Government Bond rate at the time you took out the Lifetime Loan, with
– B The 5 year Irish Government Bond at the date you are making the full repayment (or the nearest comparable rate most favourable to you)

If B is higher than A no ERC is payable.

ERC Exemptions

No ERC will arise when a loan is repaid in full or in part due to one of the following events:

• Death of last Nominated Resident
• Move to permanent long-term care of last Nominated Resident
• Full repayment within 3 years of death or move to permanent long-term care of the first Nominated Resident
• Sale of the property
• Repayment following demand by us in certain circumstances
• After 10 years of taking out your Lifetime Loan
• After your 88th birthday e.g. If you are aged 80 when the loan is taken out and you repay it 3 years later, the ERC would only apply to the remaining 5 years to your 88th birthday
• For repayments made within 10 years, the ERC only applies to the remaining period to 10 years e.g. a loan repaid 7 years after taken out will incur 3 years of ERC

How the ERC is calculated

No ERC will be charged if interest rates are higher than or equal to when the loan was taken out. This is determined by comparing:

• The 10-year Irish Government Bond rate at the time you took out the Lifetime Loan, with
• The Irish Government Bond rate for remaining period in respect of which the ERC is payable at the date you are making the repayment (or the nearest comparable rate most favourable to you)

You remain the owner of the house, so you are entitled to sell it and move to another one at any time. However, a number of practical issues arise:

• If you sell the house the loan becomes due for repayment.
• You may request to transfer your loan to the new house instead, subject to the usual lending criteria (age and house value), but you must tell your lender in advance. If the new property is worth less than the original one you may be required to repay some of the loan.
• If there would be insufficient funds to repay the loan after selling the house and buying a new one, you may not be able to move unless you have alternative funds to repay the loan (or part of the loan in a transfer situation).

It is best that you contact your advisor or lender first if you are thinking of moving. A new loan application will be required, including a new Set Up fee and new legal fees.

This is a personal and individual matter for each homeowner. No don’t have to involve your family but we recommend you discuss your plans with them before making an application. Your qualified financial advisor may also advice that some of your family members attend the meeting with you.

Yes. At the outset you borrow a percentage of the value of your home, any money remaining after the outstanding balance of the loan is cleared can form part of your estate upon death.

The loan becomes repayable 12 months after you die or cease to reside in in the property. Unless there are other sources of funds to repay the loan, your home would have to be sold. The sale proceeds, after legal and selling costs have been deducted, will then be used to repay your outstanding loan balance.

When your property is put up for sale, the lender must be notified of the sale price. If the sale price, less expected legal and selling costs, is likely to be lower than the outstanding loan balance, the lender may insist on a second, independent valuation at its cost. In the event of a dispute, a mediation process will be followed.

You can at any stage clear the outstanding balance but if you so in the first 10 years of the plan it may tigger An Early Repayment Charge (ERC)

Because this is a fixed rate product, if you make any loan repayments before you are required to, this will lead to unexpected costs for the lender. This may trigger an Early Repayment Charge

An Early Repayment Charge (ERC)

An Early Repayment Charge will only then arise if you repay some or all of the loan within 10 years of taking it out. Even then an ERC will only arise if interest rates are lower than when the loan was taken out and if you are not eligible for one of the exemptions described below.

In such circumstances, an ERC may arise if you:

• repay more than 10% of the original loan balance in any one year within 10 years of taking it out  or,
• voluntarily repay the full loan balance within 10 years of taking it out

Time limit to ERC

The ERC only applies to repayments made during the first 10 years*.

• Any repayments made after 10 years are exempt from an ERC
• For repayments made within 10 years, the ERC only applies to the remaining period to 10 Years

Example: A loan repaid 6 years after taken out will incur 4 years of ERC

*If you are aged 78 or older when the loan commences, no ERC will arise after your 88th birthday. For example, if you are aged 80 when the loan is taken out and repay it 3 years later, the ERC would only apply to the remaining 5 years to your 88th birthday.

No ERC if interest rates are higher

No ERC will arise if interest rates when the repayment is made are higher than when the loan was taken out. This is determined by comparing:

– A The 10 year Irish Government Bond rate at the time you took out the Lifetime Loan, with
– B The 5 year Irish Government Bond at the date you are making the full repayment (or the nearest comparable rate most favourable to you)

If B is higher than A no ERC is payable.

ERC Exemptions

No ERC will arise when a loan is repaid in full or in part due to one of the following events:

• Death of last Nominated Resident
• Move to permanent long-term care of last Nominated Resident
• Full repayment within 3 years of death or move to permanent long-term care of the first Nominated Resident
• Sale of the property
• Repayment following demand by us in certain circumstances
• After 10 years of taking out your Lifetime Loan
• After your 88th birthday e.g. If you are aged 80 when the loan is taken out and you repay it 3 years later, the ERC would only apply to the remaining 5 years to your 88th birthday
• For repayments made within 10 years, the ERC only applies to the remaining period to 10 years e.g. a loan repaid 7 years after taken out will incur 3 years of ERC

How the ERC is calculated

No ERC will be charged if interest rates are higher than or equal to when the loan was taken out. This is determined by comparing:

• The 10-year Irish Government Bond rate at the time you took out the Lifetime Loan, with
• The Irish Government Bond rate for remaining period in respect of which the ERC is payable at the date you are making the repayment (or the nearest comparable rate most favourable to you)

As you are living in the home, you remain responsible for the day-to-day maintenance of your property (for example, decorating and repairs) together with the property insurance and all bills and taxes.

It is the homeowner’s responsibility to maintain the property to a reasonable standard. If you require any alterations to your property, you must firstly obtain Home Plus’s written consent, which will not be unreasonably withheld. Any request must be sent in writing with full details of the works involved prior to them being undertaken. Home Plus will then decide and notify you in writing where they consent to such works. If you are in any doubt about the requirements here, then feel free to call or email Home Plus and one of their team will be happy to help you. Please note: Minor decoration or repainting does not require a request. Only when there are material alterations being made, do they require our consent.

Other residents

Friends or family may live with you but if they are not Nominated Residents they will have no right under the Lifetime Loan to remain in the property after you (the second of you where there are two Nominated Residents) die or cease to reside in your property.

Depending on the age and circumstances of these other residents, it may not be possible to get a Lifetime Loan on the property or these other residents may be required to obtain their own independent legal advice and sign a waiver acknowledging the relevant loan conditions.

The Nominated Residents are obliged to complete an Annual Questionnaire to inform the lender of any changes in circumstances which might affect the loan.  This includes a question on whether there are any changes in who is resident in the property.

It is a condition of the Lifetime Loan that you do not lease all or part of your property to another party without the lender’s prior approval.

Residents in the home

A Lifetime Loan is primarily intended for singles or couples living without other people in residence with them. Life can be more complicated than that, so you need to know the implications if there are other residents in the home.

Nominated Residents

The Lifetime Loan allows a maximum of two residents to be classed as ‘Nominated Residents’:

• Only Nominated Residents have the right to live in the property for as long as they live or as long as they wish without repaying the loan.
• Where there is only one Nominated Resident, he or she must be at least 60 years of age.
• Where there are two Nominated Residents, the younger of you must be at least 60 years of age.

Other residents

Friends or family may live with you but if they are not Nominated Residents, they will have no right under the Lifetime Loan to remain in the property after you (the second of you where there are two Nominated Residents) die or cease to reside in your property.

Depending on the age and circumstances of these other residents, it may not be possible to get a Lifetime Loan on the property or these other residents may be required to obtain their own independent legal advice and sign a waiver acknowledging the relevant loan conditions.

The Nominated Residents are obliged to complete an Annual Questionnaire to inform the lender of any changes in circumstances which might affect the loan.  This includes a question on whether there are any changes in who is resident in the property.

It is a condition of the Lifetime Loan that you do not lease all or part of your property to another party without the lender’s prior approval.

Borrowing more later

An existing Lifetime Loan can’t be ‘topped up’. Instead, you would have to take out a new, larger loan and repay the old loan using some of the proceeds of the new loan.
The interest rate for the new loan would be the interest rate on offer at the time. This might be higher or lower than the rate on the old loan.

Borrowing More

If your future circumstances change, and you would like to borrow more, this might be possible if the combination of your future age and house value would qualify you for an amount exceeding your current loan balance.
For example, if you initially borrowed €50,000 and this grew over time to €70,000, you could apply for a new loan in excess of €70,000 if your then age and property value supported it.

The old loan would have to be repaid and you would receive the difference. For example, if the new loan was for €100,000 you would have to use €70,000 to repay the original loan and would receive a net amount of €30,000 with a new starting loan balance of €100,000.

 The process would be the same as for a new loan application, involving a new Client Fact Find, property valuation, full legal process and the payment of any set-up fees required for new loans.

There is no guarantee that you will be approved for a new loan at a future date. The maximum amount of your proposed new Lifetime Loan will be determined based on your property value and your age at the date of the new application.

Your plan does not change based on a rise in property value.

Your plan does not change based on a fall in property value.