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Irish Times
23-05-2025
- Business
- Irish Times
What are your options if you want to release wealth tied up in your home?
Equity release was all the rage during the Celtic Tiger years. Property owners were regularly advised to use equity that had built up in their homes to buy more property. In an environment where property prices were rising fast, you'd be a fool not to ...or at least that was the common refrain, until the bubble burst. Equity release providers shut up shop almost faster than the banks pulled tracker mortgage offers. The financial peril of playing the leverage game with property purchase rapidly became clear. Many people were plunged into financial turmoil: some have yet to emerge, others never will. But that doesn't mean there is no place in the market for equity release – only that consumers need to be fully aware of what it involves and clear in their mind as to why it might represent good value for them. READ MORE And after a decade long hiatus, equity release is slowly returning to the Irish market. [ Over-60s can borrow against equity in their home. But should they? Opens in new window ] So who's offering such loans, how do they work and what are the factors you need to consider? Núa Money Núa Mortgages, which offers mortgages across the range – first-time buyers, movers, switchers etc – were in the news recently when they announced cuts to their rates. They headlined cuts of up to 0.95 of a percentage point and, pointedly, the most dramatic cuts were in their equity release products. One of their big selling points is the speed at which you will get a decision and the fact that they don't require months of bank statements and evidence of clean living; they just want to be sure that you have repayment capacity as shown by your net disposable income on its assessment calculator. Núa offers three distinct equity release options – Switcher Extra which allows you take equity from the property when you switch the outstanding mortgage to Núa; Switcher One, which is a debt consolidation product that also offers the option of equity release; and Home Plus, which is designed for people with no outstanding mortgage loan on their home. How much you can borrow depends on the value of your home and the loan to value that will exist with the borrowings. Under Home Plus, you can borrow up to a maximum of €400,000 if the loan amounts to half or less of your home's value; €300,000 for loans of 50-60 per cent of the property value; and €200,000 for loans that amount to no more than 70 per cent of its value. Núa offers a three-year fixed rate of 4.6 per cent on loans of up to 60 per cent and 5.1 per cent for higher borrowings. If you opt for a five-year fix, the respective rates are 4.85 per cent and 5.25 per cent. The rates for the Núa Switcher Extra allows you to release equity up to a slightly higher level – 80 per cent loan to value. The interest rates are slightly higher at 4.8 per cent up to 70 per cent loan to value on a three-year fix and 5 per cent if the borrowings are somewhere between 70 and 80 per cent loan to value. The five-year fixes are at 5 per cent regardless of the loan to value. However, the amounts you can borrow are lower – up to €300,000 on a loan to value of less than 50 per cent, €200,000 from there up to 60 per cent, then €100,000 up to 70 per cent and €75,000 if the equity release brings your borrowings to between 70 and 80 per cent loan to value. On its debt consolidation Switcher One product, the interest rate is 5 per cent regardless but the amounts you can borrow are reduced – no more than €125,000 even if the outstanding loan to value is below 50 per cent, €100,000 between that and 60 per cent, €85,000 up to 70 per cent and €75,000 from there up to 80 per cent. In all cases, you are paying a premium for the equity release over its standard first-time buyer and mover rates which starts from 3.6 per cent, a full percentage point cheaper. Bank of Ireland Among the mainstream banks, Bank of Ireland offers an equity release option. It says you can borrow anywhere from €15,000 to 90 per cent of the value of your home. Obviously, if you have an outstanding mortgage, the 90 per cent loan to value upper limit on any equity release will include the outstanding balance on that loan. Bank of Ireland says you can choose a repayment terms of anywhere between five and 30 years, though clearly that will be impacted by other issues such as your current age. And Bank of Ireland says you can choose from the same interest rates as those available to first-time buyers, movers or switchers over two, three, five and 10-year terms. These range from 3.3 per cent to 4.05 per cent depending on the term and your home's building energy rating (BER). On its website, the bank also says the term you choose for repaying the equity release element of your loan can be different from the term outstanding on your current mortgage, though in terms of value for money, the more you extend the life of the loan, the more you will pay in interest. It also offers a 2 per cent cashback on the new element of the mortgage. So if you are taking €50,000 of equity out of your home by topping up your mortgage, you will get €1,000 back in cash once the agreement is signed. Spry Finance And then there is Spry Finance, also known as Seniors Money, which specialises in equity release for those over the age of 60. Its main product is something called a lifetime loan which allows you to borrow against the equity you have built up in your home. The property has to be worth at least €300,000 if it is in Dublin and €225,000 elsewhere in the State, and mortgage free – or you can use some of the lifetime loan to pay off any loan balance as well as freeing up equity. You are expected to keep your home well maintained and Spry can insist on repairs if they find otherwise. The amount you can borrow is determined by the value of your home and your age. At 60, you can borrow up to 15 per cent of the value of the property. The percentage rises by one percentage point every year above that up to 40 per cent of the value of the home for someone who is 85 or older, up to a maximum loan of €500,000. The minimum loan available on Spry Finance is €20,000. The attraction for many people here is that the interest is rolled up with the loan meaning you do not have to make monthly or other payments. However, that obviously eats into the remaining equity in the property and you are paying a premium for the privilege as, at 6.7 per cent, the interest rate on the loan is higher than the other options. There is a 'green' rate of 6.5 per cent for homes with higher BERs. Spry commit that, regardless of how long you live, the balance of the loan will never amount to more than the value of the property. So, you may have nothing to leave your family, but at least you leave them no debt, which was an issue with some previous equity release products in the Tiger years. You can also chose to ringfence at least 20 per cent of the value of the property so that Spry can only recoup a maximum of 80 per cent of the property value when you die, or sell. Doing so will add 0.1 of a percentage point to your interest rate. To give you an example of how the balance of the loan can build up, if you were to borrow €50,000 at 70, the loan balance would be almost €70,000 five years later on the basis of the 6.7 per cent fixed rate, and €97,709 at the age of 80. There is also a €1,500 charge to set up the loan in the first place. Spry does offer a calculator on its site to allow you assess the cost of the loan and the value remaining in your home. It assumes the value of the property will rise by 2 per cent a year. It does offer the option of making repayments against the loan of up to 10 per cent of the balance per year for those in a position to do so. Lifetime loans are not a cheap option and you need to consider the financial implications carefully before going down this route but it does offer access to funds for people with limited or no repayment capacity. Equity release got a bad name after the crash and it is certainly worth remembering that this is anything but 'free' cash. However, it does offer people the option to release some of the value of their most valuable asset if the need, or desire, for cash arises. And the range of products available does provide options both for those with earning capacity and those without. You can contact us at OnTheMoney@ with personal finance questions you would like to see us address. If you missed last week's newsletter, you can read it here .
Irish Times
21-05-2025
- Business
- Irish Times
Mortgage market shake-up brings new lenders offering greater flexibility
The mortgage market has had a shake-up and there might be something in it for you. Those borrowing for a home with a low building energy rating (Ber), public servants or anyone wanting discounted repayments in the first two years should know about new deals that are available from Avant and ICS . And if you haven't been living like a monk for six months and need mortgage approval in hours, not weeks, then Núa Money and MoCo 's artificial intelligence-driven process might be for you. Whether you're buying your first home or looking to switch mortgage, it's worth checking out the new kids on the block. Some of the best mortgage rates in recent years have been fixed rates, linked to high building energy-rated homes – until now that is. READ MORE Those with a low Ber are no longer stuck out in the cold. Avant's new Flex mortgage doesn't give a hoot about your insulation. It offers interest rates as low as 3.04 per cent for some borrowers – and you don't have to fix either, well, not for long. Flex is a bit like the old tracker mortgage in that it tracks a key euro zone lending rate – the 12-month Euro Interbank Offered Rate (Euribor) – the average interest rate at which European banks lend money to one another. So it's not the European Central Bank rate, but it behaves a bit like it. 'Every month, on the 10th of the month, Avant writes to brokers to confirm what the Euribor rate is on that date and that rate is held and available to the customer during that month,' mortgage broker Michael Dowling of Dowling Financial says. Avant adds a set margin to this rate, which will depend on your loan-to-value (LTV) ratio. For those with a 10 per cent deposit, or a loan-to-value higher than 80 per cent, a 1.1 percentage point margin is added. For those with a 20 per cent deposit or a loan-to-value below 80 per cent, the margin is 0.9 of a percentage point. The interest rate for Flex customers is set on the day you draw down your mortgage. It is fixed at that rate for the first 12 months of the mortgage, so Flex mortgage customers have certainty over their repayments the 12 months following at least. 'This is a tracker mortgage with a 12-month fixed element to it is how I would describe it,' Dowling says. So what are the rates like? At the time of writing, those borrowing 80 per cent of the value of the home can access a rate of 3.04 per cent. Those borrowing between 80 and 90 per cent of the value will be offered 3.14 per cent. A year into your mortgage, your rate is adjusted based on the 12-month Euribor market rate at that date. Though a fixed rate, the product retains some of the advantages of a variable rate. 'If after three months you felt nervous about what's happening with interest rates, you can switch out of it into a longer-term fixed rate with no penalty,' Dowling says. If after 12 months you want to change to a three or four-year fixed rate instead, you can do that too. 'The projections on this product are even better over the next number of months because the ECB is expected to reduce rates even further,' he says. Flex suits a number of people, says Margaret Barrett of broker Mortgage Navigators. If you're buying or switching mortgage on a home with a low Ber, the product will certainly pique interest as rates compare well with green rates from pillar banks. Someone who has a variable element to their income, like a bonus, will value the facility to overpay the mortgage without penalty, Barrett says. This is typically more limited for fixed rate mortgages. First-time buyers are typically borrowing 90 per cent loan-to-value, for which Bank of Ireland is offering a 3.1 per cent fixed rates long as you have an Ber A-rated property. While that interest rate is cheaper than Avant's, you have a greater capacity to overpay the mortgage with Flex and you don't have to spend on a retrofit to get the rate. The Flex will appeal to those with a low mortgage borrowings too, Barrett says. 'Some lenders have a minimum amount of borrowing, so their cheaper rates are only available if you are borrowing €250,000 or more, but Avant doesn't have that requirement. The Flex is available on mortgages over €100,000, and the Ber is irrelevant.' AIB's green rate for those whose mortgage is less than 50 per cent loan-to-value is 3 per cent, so the Flex is a competitive alternative, she says. Those self-building or availing of the Government First Home Scheme need not apply, however. Avant's Flex is not available to them. Indeed, Avant, Nua Money, MoCo and ICS don't lend for self-build or to those buying with the help of a scheme that puts a local authority charge on the property. Interest-only If you need money in the near term to renovate your home, to pay for childcare or to bridge an income gap while one earner takes time out, the new Flexi two-year interest-only option from ICS is worth considering, but with caveats. This rate gives owner occupiers a break in the first two years, where you pay only the interest on the loan, but you must take out a five-year fix. It is open to first-time buyers, movers and mortgage switchers and is available to those borrowing up to 90 per cent of the value of their home, with a minimum loan size of €100,000. Interest-only for the first two years means reduced payments. Capital and interest repayments apply for the remaining term. Rates are from 4.25 per cent up to 4.4 per cent, fixed for five years – so they are not the cheapest. If you borrow €250,000 over 30 years at a rate of 4.25 for example, you'd pay €1,229 a month on a normal capital and interest mortgage. With ICS's two-year interest-only feature, your mortgage repayment for the first two years will only be €885 a month. But your mortgage will move to a capital and interest mortgage at the start of year three with repayments increasing to €1,273 a month; that's an overnight jump of €388 a month. Just like Avant's back-to-the-future, non-tracker tracker product, this has a hint of the Celtic Tiger to it. Some borrowers ran into difficulty back then with features like this. 'Personally if a first-time buyer is looking for interest only for the first two years, I'd be concerned for when the repayments ratcheted up,' Dowling says. Public-sector workers The ICS Flexi product is not the most competitive rate in the market right now, but there is a sweetener for public-sector workers, Barrett says. Whether you are a public-sector worker or you are buying a house with one, the Flexi will enable you to borrow several points further up the salary scale than with some other banks. 'For customers looking for maximum borrowings, the interest rate might not be the main decider,' Barrett says. For joint mortgage applications where the public servant is not the main earner, ICS will assess their income five points up their pay scale. Take the example of the primary earner who works in the private sector worker and their teacher partner who are applying for a mortgage. The primary earner is earning €65,000 and the secondary earner teacher is on point three of the salary scale, earning €43,469. There is even more flexibility for two public-sector applicants For the purposes of assessing how much they can borrow, the teacher's income will be assessed five points up at point eight on the salary scale, bumping up their assessable income to €52,021. This enables the couple to borrow more at €468,084 – almost €35,000 more than if they were assessed on the current teaching salary. Their mortgage repayments, interest-only for the first two years, will be €1,716 a month. After two years, this will move to capital and interest payments of €2,425 a month for the remaining three years of the five-year fixed period. Under standard criteria, where the public-sector applicant would be assessed at three points up, the loan size would be €451,008, with capital and interest repayments of €2,258 a month. There is even more flexibility for two public-sector applicants. The main earner will be assessed at three points up the salary scale, and the secondary earner at five points up. MoCo and Nua will lend two points up the salary scale while Avant will lend one point higher. PTSB and Bank of Ireland don't offer the feature. AIB will also go three points higher, but it's not as generous as ICS's new feature, Dowling says. While the Flexi enables public servants to borrow more, their mortgage will be more expensive in the longer run due to the interest-only start. Repayment ability If you need mortgage approval in hours, not weeks, then new Irish lender Núa Money might be the one for you. 'They are the first real digital mortgage; their speed of accepting a client is unparalleled,' Barrett says. 'You could submit something at 9.30am and have a full loan offer by 10.30am.' How do they do it? They sidestep the cottage industry that proving repayment ability has become since the financial crash. This is where the mortgage applicant must live like a saint for six months, providing reams of bank statements as evidence. The broker would then comb through the applicant's financial history looking for misdemeanours and proof of ability to repay. Guess what? Núa Money doesn't care about your bank statements. 'Not needing to demonstrate repayment capacity is a game changer for the Irish market,' Barrett says. 'Núa has decided if you have the net disposable income on the assessment calculator, you have demonstrated you can pay.' People whose dream home came up for sale, but whose bank statements for the previous six months weren't pristine, value Núa's pragmatism and speed, she says. Brokers are happy to be absolved of this grunt work too, she says. This is challenging the legal system which is obsessed with getting hard copies of everything and producing original signatures Núa says it is catering to the 'thousands of customers with the financial capacity to afford a mortgage who are being locked out by outdated lending models'. The lender also offers loans to immigrant visa holders who have been here for six months and have passed work probation. Bonus income is looked on more favourably too. Rates start at a 3.6 per cent for a three-year fix for customers with a loan-to-value ratio of 60 per cent. Those customers will get 3.65 per cent if they fix for five years. For those with loan-to-value of 70 per cent, the three and five-year rates are 3.9 and 3.95 per cent respectively. These mortgage rates aren't the cheapest on the market, but the product will appeal to buyers wanting to move fast and avoid the faff. 'I can get a mortgage approval letter in one hour and a loan document in two hours,' Dowling says. 'With AIB, Bank of Ireland, PTSB and Avant, it takes 10 to 15 working days.' Electronic rather than physical signatures speed up the legalities too. 'This is challenging the legal system which is obsessed with getting hard copies of everything and producing original signatures. They are light years ahead of the other banks,' Dowling says. Austrian-owned MoCo is also using technology to speed things up. All applications are done online using Open Banking – a system that enables banks to share data. No need to order bank statements. For those borrowing 90 per cent loan-to-value, MoCo offers a three or five-year fix of 3.95 per cent. For those borrowing 60 per cent, the rate for a three or five-year fix is 3.6 per cent.
RTÉ News
13-05-2025
- Business
- RTÉ News
Núa Money to cut rates on mortgages, equity release products
The newest mortgage lender in the State, Núa Money, has announced rate reductions across its residential mortgage and equity release products. Núa Money said its Switcher Extra mortgage product would see cuts of up to 0.95%, while it also has new rates starting from 3.6% a year for first-time buyers, movers and straight switcher products. Núa began lending in Ireland at the end of last year. It said it is focused on broadening the mortgage market by offering lending solutions to people who, despite having strong affordability profiles, are currently underserved by the "rigid practices" and conditions found elsewhere in the market. Fergal O'Leary, Chief Commercial Officer of Núa Money, said the lender's mission is simply to make the mortgage process simpler, fairer and more accessible to more customers by combining attractive products and competitive pricing with cutting-edge technology. "These new rates bring us another step closer to making homeownership a reality for more individuals and families across Ireland, and to opening up channels for existing mortgage holders to release some of the equity in their homes," he said. "We know that there are thousands of customers out there with the financial capacity to afford a mortgage but are currently locked out by outdated lending models. Our goal is to change that," he added. Núa Money said its 60% loan to value (LTV) five-year fixed mortgage rate would fall to 3.6% from 3.85%, while its 60% LTV five 5-year fixed would drop to 3.65% from 3.75%, its 70% LTV, 3-year fixed would drop to 3.9% from 4.15% and its 70% LTV 5-year fixed would ease to 3.95% from 4.05%. It also said that fixed rates on its Switcher Extra product, which offers equity release up to €300,000, will fall to 4.8%-5% across 60-80% loan to value bands from 5.75%.
Irish Independent
13-05-2025
- Business
- Irish Independent
Tracker mortgage holders on alert as doubt cast over expected ECB rate cut next month
ECB board member Isabel Schnabel said turmoil in the global economy was fuelling price pressures. Her comments came as a new mortgage lender cut its lending rates by up to 0.95 percentage points. Ms Schnabel said inflation was at risk of exceeding the ECB's 2pc target in the medium term. The ECB's main role is to control inflation and it uses interest rates to achieve this. The Frankfurt-based central bank has cut rates seven times in the past year, with another 0.25 of a percentage point rate cut expected on June 5, a move that would directly benefit 130,000 tracker mortgage holders. Two additional rate cuts later in the year had been expected by markets. Rate cuts should make borrowing more affordable for first-time buyers if banks and non-bank lenders pass on the lower eurozone rates in the form of lower mortgage rates. However, lower mortgage rates would also leave more new borrowers chasing a limited supply of housing for sale. Ms Schnabel cast doubt on new cuts. She wants to keep rates unchanged since they are already low enough not to hold back the European economy. 'Now is the time to keep a steady hand. The appropriate course of action is to keep rates close to where they are today,' Ms Schnabel told a conference. Financial markets see a 90pc chance of a rate cut in June and expect another cut or two in subsequent months, indicating that Ms Schnabel's view goes counter to investor bets. In the near term, inflation could even dip below the ECB's 2pc target, Ms Schnabel said. This is due to lower energy costs, a strong euro, anaemic economic growth in the eurozone and high uncertainty created by the US administration's trade war, she said. But there is a big risk that costs could go the other way, and rise, in the medium term, pushing up inflation. Inflation in the currency zone could be boosted by an expected spending surge by governments in the eurozone, driven by Germany's pledge to boost defence and infrastructure investment. Damage to international trade due to US-imposed tariffs could also push up costs and boost prices. Non-bank lender Núa Money has reduced its rates across its residential mortgage and equity release products, with cuts of up to 0.95 of a percentage point on its Switcher Extra mortgage product. Núa, which began lending in Ireland only late last year, said it would have new rates starting from 3.6pc for first-time buyer, mover and switcher products. Mortgage broker Michael Dowling said reductions in rates were always welcome. But he said that in relation to owner-occupier rates, the reduction of 0.25 of a percentage point would be geared to those borrowing less than 70pc loan to value, which would exclude the majority of first-time buyers. Mr Dowling said that, for second-time buyers, the three- and five-year fixed offerings were very competitive, where the loan-to-value is typically less than 70pc. The reduction of 0.25 of a percentage point would save borrowers €39 a month on a €300,000 mortgage, he said.
