IFG Group has launched a new equity release loan for homeowners aged 60 and over in a joint venture with New Zealand-based finance company Sentinel.
The Seniors Money 60-plus Loan is modelled on a home equity release product sold by Sentinel in Australia and New Zealand. It will be distributed through IFG's network of brokers in the Republic, the first European country in which Sentinel has decided to launch.
Unlike existing home reversion schemes, people do not have to sell a share of their property to access the value of the equity in their homes.
The product works as a loan on which no repayments are due until the homeowner permanently leaves their home or dies.
However, unlike a similar product offered by Bank of Ireland, the Seniors Money loan does not have any fixed term and homeowners can choose to repay the loan at any time if they wish.
The minimum loan is €20,000. The maximum amount depends on the homeowner's age and the value of the house. At age 60, the maximum percentage of the property's value that can be borrowed is 15 per cent. This rises by 1 per cent per annum to a limit of 45 per cent for people 90 and above.
The loan can be taken as a lump sum, as quarterly payments or as a combination of both. Top-ups are available.
Stephen Gunning, chief executive of Sentinel Europe, said he believed its loan addressed most of the criticisms associated with existing products. "Experience indicates that homeowners are naturally reluctant to irreversibly sign away their ownership under a reversionary scheme," he said.
The current interest rate on the loan is 5.2 per cent, about 1.5 per cent to 2 per cent higher than standard variable mortgage rates.
The loan includes a guarantee that the customer will never owe in excess of the value of their home if property prices collapse.
There is an application fee of €1,149, which includes the property valuation and the cost of independent legal advice.
Under the Irish Financial Services Regulatory Authority's new consumer protection code, companies selling equity release loans aimed at older people must outline the consequences of buying the product.
