Selling and then buying/upgrading with Spry finance for retired mother - what to look out for

My mam can sell her home for about 220k, and owes 45k on the mortgage. Assuming she sells, she'll have 175k towards new purchase.
She has 80k cash, between retirement lump sum and savings, so if she put half towards a house, that would bring it up to 215k.
She wants to move towards the north side, to an apartment, which we think will cost 270-300k, so we're short.

I looked into Spry Finance, it looks like based on her age (64) and the value of the new home, they'd release 50-60k equity, which she could also put towards the cost of the house, which would bring her up from 215k to 270k ish. There is some flexibility on the budget, she might put more of her savings, I might give her 10-15k (via a loan) for the right property.

Their interest rate is 6.7% per year, you can pay the loan back to a max of 10% per year on a monthly basis. It is likely I will pay this, €427 per month. I can afford this. When my mam's inheritance comes in (sometime in the next 5-10 years) she will clear the loan (and any potential penalty). My brother and I have our own homes, and are agreed on splitting inheritance less whatever I directly contribute, I am not concerned about this.

• Should I be worried about anything with Spry that I havent considered?
• Any advice for a retiree who will probably be overwhelmed selling and buying?
• Anything else we should look at? We are also going to talk to Credit Union for example.

I did a Spry mortgage. I pay the interest each month (suits me to). I found it a great option. Their info pack is very detailed and very clear.

Always worth going through a financial advisor to advise if any other options that might suit you guys. I did that with finance advisor and Spry was the option they suggested but was also the only real option for me in my 70's.

Thanks Dublin Walker
I just spoke with a broker who didnt even know about them, but they seem legit...
Feels almost too good to be true?

How do the steps work, does she borrow against current property? And then use those funds to buy the new one along with sales proceeds and savings? Is there anything in the Spry agreement that says she would need to repay the loan on selling the current property?

When you repay each month, is this also a loan to be repaid out of the estate on death? Otherwise it is a gift and you would go over the 3k annual small gift?

Let's look at the numbers here.

Target price of house €300k
Equity in existing house €175k
Savings €80k cash
Total: €255k
Loan needed : €45k

Spry is a great product, but 6.7% is dear. It's a fair price, but it's dear.

If you or your brother can come up with the €45k , then that is what you should do.

She will then own a house worth €300k with a personal loan from you of €45k.

If, at some stage, she needs cash, and you don't have it for her, then she can always go to Spry and borrow it.

But she should not borrow at 6.7% now while keeping €40k cash in a deposit account earning around 2%.

Brendan

Another option to explore but it's unlikely to work. Ask her current lender will they give her the mortgage until she is 70 or 75.

Brendan

Honestly said:

Thanks Dublin Walker
I just spoke with a broker who didnt even know about them, but they seem legit...
Feels almost too good to be true?

Click to expand...

They are legit. Had same type of thoughts. It is what it is, the rate is higher but payments are optional and it’s a fixed rate forever.

Irish Mortage Corporation is who I talked to. They are a big broker. They have a Spry section on their website.

Are you talking about releasing equity on her current house in order to help buy the new property?

Spry rules state that a loan against a property must be paid back in full if that property is sold.
She'd end up no better off (and might be worse off due to interest charges)

Spry will let you borrow against the home you will own if you can get them a letter that the property is sale agreed.

Brendan Burgess said:

Let's look at the numbers here.

Target price of house €300k
Equity in existing house €175k
Savings €80k cash
Total: €255k
Loan needed : €45k

Spry is a great product, but 6.7% is dear. It's a fair price, but it's dear.

If you or your brother can come up with the €45k , then that is what you should do.

She will then own a house worth €300k with a personal loan from you of €45k.

If, at some stage, she needs cash, and you don't have it for her, then she can always go to Spry and borrow it.

But she should not borrow at 6.7% now while keeping €40k cash in a deposit account earning around 2%.

Brendan

Click to expand...

Thanks Brendan, I can absolutely see how that's good advice.

Understandably, she doesnt want to put 100% of her cash into the house, wanting to keep an oh-This post will be deleted if not edited to remove bad language fund for emergencies. Based on this guidance, I can encourage her to go to 60k I think, but she wont want to be without some emergency cash.

My bro is great, but just bought and is renovating his own home, he doesnt have it to lend. I can give 15k, but that would still leave us quite short.

This is the Spry Finance calculations for this scenario. I just find it a bit confusing how the amount owed increases at 20 years, assuming I pay 10% a year off? We plan to clear before then of course, but I would love to make sure I understand it first.

Honestly said:

I just find it a bit confusing how the amount owed increases at 20 years, assuming I pay 10% a year off? We plan to clear before then of course, but I would love to make sure I understand it first.

Click to expand...

I asked Spry about it and the calculator assumes that the person will make repayments for only 15 years and that there will be no repayments after 15 years! They are going to fix it.

Brendan

Wow... amazing. Thanks Brendan.

Hi folks, quick question
My mam has 40k remaining on her mortgage and a lump some of 80k.
She's sale agreed to sell her house, and sale agreed to buy an apartment. Is there pros/cons to her clearing the mortgage with her lump sum, vs clearing it with the sale of the house? The main thing we would like is simplicity + whatever is faster.
Thanks

I would clear the mortgage now and get the deeds back from the bank just to eliminate any delay on that side when selling the house.

Brendan

Great. Her solicitor has the deeds already afaik, but will do this either way. It's a council house she's selling and they're making her jump through some hoop so hopefully it'll be grand!

Honestly said:

It's a council house she's selling and they're making her jump through some hoop so hopefully it'll be grand!

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Presumably that hoop is the Burden imposed by the relevant Council - like this one:-


It's easily got rid of, but when we emailed the relevant section of the Council they lost the email, so we had a few weeks delay before a phone call sorted things out!