Spend Your SSIA Money Now
What are SSIA’s
Introduced by Minister for Finance in Budget 2001 as scheme to encourage savings by Irish residents.
Main Features of SSIA Accounts:
- Launched 1 May 2001, closed 30 April 2002.
- Maximum monthly contribution €254, 5 year period.
- For every €4 you save, the Government will add an additional €1.
- Savings are State Guaranteed. There are no Charges, Fees or Commission.
- Exit Tax 23% on profit made from investment of both savers subscriptions and Exchequer contribution.
Over 1 million SSIA accounts opened, valued at €8.35 billion at 31 December 2004, and expected to be c. €15 billion at full maturity.
SSIA account value at maturity is estimated at €20,000. * Value after 23% Exit Tax on profits is €18,900.
*Assumes max. monthly contribution €254.
Advantages of Investing in Overseas Property
Many people think that they cant purchase property with their SSIA money but yes you can and I will demonstrate to you here how you can start building your own property portfolio now!
You can borrow in Ireland using the equity in your property in Ireland as security to purchase a property overseas. You can borrow a property on an Interest only loan or on a capital and interest basis. It is possible to borrow overseas in many of the established overseas countries like Spain, Portugal, Florida, Italy even Estonia Poland and Latvia. In the emerging markets of Turkey, Croatia and Montenegro you cannot yet borrow. It is likely that mortgages will be available soon in Bulgaria and Turkey. It is important therefore to contact us and discuss your options and we can refer you to an independent mortgage broker who can discuss your requirements with you.
Aquarius Properties have developed some excellent property projects which are specifically suited to clients who want to spend their SSIA money on property and you can see below why its such a great option for you!
Remember if you spend your money on Stocks and Shares you cant borrow to do this as banks wont lend money for this kind of purchase as its too risky.
- You can finance your overseas property purchase by differing means: cash, SSIA, term loan, mortgage, equity release, or a combination of these, subject to terms and conditions
- You can use surplus equity in your home to buy property abroad
- Beneficial where you may want to buy/sell property in 4 to 10 year window period
Example of how it can work:
- Property costs €120,000 plus purchase costs of of €6,500.
- Property has 6% guaranteed rent for 4 year period, with 4% net annual return expected thereafter.
- Buyer has own equity €30,000 (including SSIA funds) and borrows €96,500 by releasing equity from home residence at 3% interest rate.
- Property increases in value by 20% in Year 1, 15% in Year 2, and 12% in each of the following 3 years.
- Property sold in year 5 for €207,728 before taxes.
Leveraging
Leveraging means using any free equity you may have in your present property portfolio to borrow more money to purchase more income generating property.
Free equity is the difference between the value of your property and the mortgage you have on it. Usually banks will allocate at least 80% LTA, Loan to Value on your property. This is a concept you need to understand if you intend to build your own property portfolio.
Passive income is what is left over from the rental income after paying the mortgage and any annual costs on the property. This is the ultimate goal for investors and can take a few years to achieve.
Example
Sell your investment property after 10 years.
Net sale price €408,000
Repay balance of initial loan €196,0000
During the ten years the rental income covered the mortgage repayments and all costs.
Net proceeds €212,000
Initial cash outlay €30,000 for deposit and furniture
Capital Gain from sale €182,000
Net return on your cash investment of €30,000 before taxes 606%, that's an average gain of 60% pa.
Had you invested this money with a bank at 4% pa you would have earned €14,403 in the same period an annual yield of 4.8% pa
This explains the power of leveraging . See the Build a Property Portfolio ssection of our web site which explains this further.
Capital return on your initial cash outlay of €30,000 is 270%, an annual return of 54%
Rental return is 24%, an avg. annual return 6%.
Note: Guaranteed rental income for 4 years, and net rental for year 5, covers annual loan interest payments for 5 years plus.
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