6 things to consider when applying for a lifetime loan

A lifetime loan is a form of equity release that allows you to release some of the wealth you have tied up in a property you own to spend as you see fit.

This is the third guide in this five-part series exploring lifetime loans. The other guides in the series will be linked at the end of the page. 

1. The other options available to you

Before applying for a lifetime loan or an equity release, it is important to consider other options first. For example, if you are looking to boost your cash income from your property, you could:

• Downsize to a cheaper property
• Remortgage your home
• Rent out one or more of the rooms in your property
• Transfer ownership of your home to a family member in return for the cash you need and the right to live in the property for life. Be sure to get independent legal advice if you are considering this option

2. The home you live in

A lifetime loan is directly tied to the value of your home. Therefore, considering the type of property you live in, and whether it would be accepted is a critical step towards deciding on whether to apply for a lifetime loan. 

As such, there are a few dimensions regarding your home to be considered. 

• The value of your home:

To be eligible for a lifetime loan on bonkers.ie, your property must be worth at least €250,000 if you live in Dublin, or €175,000 if you live elsewhere in the country. This is to ensure that you have enough equity to cover the minimum loan amount. 

The greater the value of your property, the larger the maximum loan you can claim is. 

• Remaining mortgage:

To be eligible for a lifetime loan you need to own your home in its entirety. If you have a mortgage remaining on your property, you will be required to pay this off using savings, or from the lifetime loan you receive. 

• Whether it meets the lender's conditions:

Your property will need to meet a variety of conditions, outside of just the value of the equity you own in the property. 

For example, your property will not be accepted if it is in a poor state of repair, or is used for commercial purposes. 

To find out more about the different conditions lenders may have, read our frequently asked questions guide.

• The BER rating of your home

The Building Energy Rating Certification (BER) can have an impact on the type of loan you might be eligible for. 

A BER rating of B3 or above can qualify you for a green lifetime loan. This is offered at a lower interest rate and set up fee, at 6.25% and €1,350 respectively.

You can also qualify for a green loan if you intend to use your loan to retrofit towards a BER rating of B3 or better within 12 months of drawing down your loan. 

Alternatively, you can qualify if you intend on using more than 50% of your loan for qualifying home improvements within 12 months of drawing down your loan. You can learn more about BER ratings here.

3. Your age

The age at which you apply for a lifetime loan will determine the loan amount you qualify for and your eligibility for this form of equity release. 

• Qualifying age 

To qualify for a lifetime loan, you must be a resident of the Republic of Ireland and at least 60 years of age. If you are applying with a partner, they must also be a minimum of 60 years old. 

• Loan-to-Value and age

The older you are, the higher the loan-to-value ratio you will be able to qualify for. This means that the older you are, the higher the percentage of the value of your property you can borrow against. 

If you are submitting a joint application, the age of the youngest applicant will be used to judge the maximum loan you can qualify for. 

The maximum loan amount you can apply for is €500,000, irrespective of age or overall property value.

Ultimately, it is at the discretion of the lender to decide what loan-to-value ratio they offer, particularly in cases where valuing your property is difficult. 

4. Your family and dependents

A lifetime loan is a major financial decision, and as such could have knock-on effects on your family and dependents. 

For example, having other family members living in your home, outside of those named on the policy, could impact your application. 

Additionally, if you decide to go ahead with a lifetime loan, you will have less equity in your property for your family members to inherit. 

However, you can also use a lifetime loan to help family members get on the property ladder, or pay for education, for example. Therefore, it is worth carefully considering what your future plans are for your family.

• Residents in the home

A lifetime loan allows applicants to reside in their home as long as they live, or as long as they wish before paying off the loan. 

It is possible to have other residents in the home, such as family members, but they will have no right to continue living in the property following the death, or decision to move out, of the lifetime loan holder. 

Depending on the age and circumstances of the other residents, you may not be eligible to take out a lifetime loan. 

• Inheritance implications

A lifetime loan could impact the amount of inheritance you plan to give to your friends and family. 

This is because, with a lifetime loan, you borrow against the equity in your home. 

Therefore, you are unlikely to be able to pass on the full value of your home to your beneficiaries after death.

While the decision to take out a lifetime loan is entirely your decision, it is strongly recommended that you consult with friends and family before committing to anything.

5. The amount you want to borrow

Your age and the value of your property determine the maximum loan amount you could receive. 

However, it is important to note that the maximum amount may not always be the best option for your circumstances. This is because the value of your loan will increase over time as interest accrues.

If you borrow more than you need, you will owe a greater amount over the long run than you needed to. On the other hand, if you take out less than you need to, you may not be able to borrow any more down the line, as you will require a new loan application.

Additionally, you may not be able to borrow more further down the line, as you will need to qualify for a new, larger loan.

During the application process, you will have the opportunity to discuss your financial needs and circumstances with expert financial advisors.

6. Your pension

A lifetime loan could impact the pension you are able to receive. 

Any contributory state pensions or widow(er)’s/surviving civil partner state pensions will not be impacted by a decision to take out a lifetime loan. 

However, if you are a recipient of a non-contributory state pension or a widow(er)’s/surviving civil partner state pension you should be aware that, because these are means-tested, your lifetime loan could impact your entitlement.

There are other means-tested benefits, such as the carers' benefit, that could also be affected by a lifetime loan. You should confirm with the Department of Social Protection if a lifetime loan would have any effect on such benefits.

Apply for a lifetime loan on bonkers.ie

Starting the process of applying for a lifetime loan is easy on bonkers.ie. 

Whether you want to set up a rainy day fund, or install environmentally friendly renovations, simply head over to the lifetime loan page, fill in a few details, and arrange a callback with one of our expert financial advisors. 

It’s as simple as that!

While you’re on the site, don’t forget to review other everyday household bills too, and compare deals for services such as energy, broadband, and banking and insurance products to see how much you could save by switching to another provider.

Take a look at our other lifetime loan guides

If you found this guide helpful, make sure you check out the other equity release guides in our series. You may be interested in the following:

• Read our Quickstart Guide for a general summary and links to other lifetime loan guides.
• Check out our guide on how to apply for a lifetime loan on bonkers.ie.
• Head over to our most frequently asked questions guide.
• Confused by the jargon? Read our guide explaining the most lifetime loan terms.

Any questions?

If you have any questions about any of the points discussed in this guide, or about lifetime loans in general, contact our team today on Facebook, Twitter, TikTok or Instagram.