# Life Loans are back



## NoRegretsCoyote (4 Jan 2021)

Life loans are back.

Seniors money is on the market.


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## Gordon Gekko (4 Jan 2021)

This is really good news for many families.

These are good products in the right circumstances.


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## Brendan Burgess (4 Jan 2021)

I spoke to the company

Details of the product are now available at






						Repayment Events - Spry Finance
					

Repayment Events The clue is in the name: A Lifetime Loan is designed to last for as long as you remain living in your home or as long as you live. The loan does not become repayable until one of the following ‘repayment events’ arises: Sell the home The loan is made against your specific […]




					www.spryfinance.ie
				




It's the one company Spryfinance and Seniors Money but the brand name Spry will be advising the borrowers.

Early Repayment and Early Repayment Charges 

Borrowers can repay 10% of the original amount borrowed every year without penalty.
Borrowers can repay the full amount without penalty any time after 10 years

They are subject to the same rules on early repayment fees as other lenders, so if interest rates generally rise, there won't be any break fees.

If you are aged 78 or over when you take out the loan, no ERC will apply after your 88th birthday.

*Other issues *

You can't borrow a monthly amount e.g. €2,000 a month to supplement your income.
Likewise, you can't get approval now for €200k but draw down only €100k.  Of course, if you want to borrow more after 5 years, you can apply again.


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## Brendan Burgess (4 Jan 2021)

How the Early Repayment Charge is calculated.    This is a simplified version.

Let's say that you want to repay your loan after 5 years.

During those 5 years, interest rates have risen by 1% - no Early Repayment Charge is payable.

But let's say that during those 5 years, interest rates have fallen by 1%.





If you don't repay it, the interest charged over the next 4 years will be €40k, so a €6k charge would be good value. 

Brendan


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## NoRegretsCoyote (4 Jan 2021)

5.5% is a pretty high rate for secured lending though.

These loans are expensive to underwrite and/or they anticipate a higher default rate than a regular mortgage book.


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## Brendan Burgess (4 Jan 2021)

Yes, it is a high rate.

BoI charges 3.3% for a ten year loan. I think that is the longest.

Life Loans are a bit unusual in that the rate is fixed for an uncertain period. It could be 5 years or it could be 45 years.  Hard to fund that I would imagine.

It's probably fairer to compare the product with a buy to let mortgage. What are the buy to let rates at the moment?

The calculator relates to the old product so the new one might be different.   But the maximum loan for a 70 year old was 25% of the house value.

The calculator does not allow for a fall in prices 

Even still, it's hard to see much risk.

Let's say, I have a  house worth €400k and I borrow €100k aged 70.

After 20 years, so when I am 90, I will owe €300k.

If the house falls in value by 50% over the next twenty years so they get back "only" €200k ,  the lender will still earn 3% on their money.

Brendan


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## Alkers86 (4 Jan 2021)

Is there an option to repay the interest annually as opposed to letting it compound?


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## gianni (4 Jan 2021)

Great to see these back. As long as the borrowers fully understand the product.

The opposition to this product usually comes from kids who are outraged that Mammy & Daddy had the temerity to spend their inheritance instead of living the last few years of their lives in poverty.


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## Gordon Gekko (4 Jan 2021)

The rates are kind of comparable with most ‘interest only’ options though.

It’s secured lending, yes, but it’s on the ‘never never’.


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## Steven Barrett (4 Jan 2021)

gianni said:


> Great to see these back. As long as the borrowers fully understand the product.
> 
> *The opposition to this product usually comes from kids who are outraged that Mammy & Daddy had the temerity to spend their inheritance instead of living the last few years of their lives in poverty.*



A lot of the outrage in fact came from elderly parents who want to live something to the 50-60 year old children. Many feel obligated that they have to leave something to their children. In many cases, the only asset that a person has is their home and they don't like the thoughts of a lender getting it.

But it is a great product for those who's only asset is an illiquid one and who needs some cash. 


Steven 
www.bluewaterfp.ie


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## Gordon Gekko (4 Jan 2021)

Can these loans be repaid prior to death? I’m thinking of a specific case I’m aware of where a good pal of mine’s parents are quite elderly and their home needs renovating. He’ll have the money in a few years but the work needs to be done now.


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## gianni (4 Jan 2021)

SBarrett said:


> A lot of the outrage in fact came from elderly parents who want to live something to the 50-60 year old children. Many feel obligated that they have to leave something to their children. In many cases, the only asset that a person has is their home and they don't like the thoughts of a lender getting it.
> 
> But it is a great product for those who's only asset is an illiquid one and who needs some cash.
> 
> ...



Why would they be outraged?? 
The product isn't compulsory.


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## Gordon Gekko (4 Jan 2021)

There’s more than a whiff of greed coming from the “angry sons and daughters”.

It seems like a great product for someone who’s asset rich and cash poor.


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## elcato (4 Jan 2021)

Gordon Gekko said:


> It seems like a great product for someone who’s asset rich and cash poor.


Or single with no dustbin lids


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## Brendan Burgess (4 Jan 2021)

I have spoken to Spryfinance and I have put the details of the product in the third post in this thread






						Life Loans are back
					

Life loans are back.  Seniors money is on the market.



					askaboutmoney.com


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## Brendan Burgess (4 Jan 2021)

Alkers86 said:


> Is there an option to repay the interest annually as opposed to letting it compound?



Yes, you can repay up to 10% of the original amount each year without penalty.


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## Gordon Gekko (4 Jan 2021)

This seems like a really good really commonsense product. I’m impressed.


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## Brendan Burgess (4 Jan 2021)

Gordon Gekko said:


> Can these loans be repaid prior to death? I’m thinking of a specific case I’m aware of where a good pal of mine’s parents are quite elderly and their home needs renovating. He’ll have the money in a few years but the work needs to be done now.



Hi Gordon

Yes.

He can repay 10% a year without penalty.
After 10 years, he can repay the full amount without penalty.

And , if he wants to repay it before the 10 years, the penalty will probably be small. 

Brendan


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## Brendan Burgess (4 Jan 2021)

Anyone taking out one of these loans now while interest rates generally are so low, is unlikely to face an Early Repayment Charge. Or if they do, it will be quite small.  

So the 5.5% wouldn't worry me too much. If another lender comes into the market and does them at 4%  or if the family can come up with the money, then the loan can be repaid. 

Brendan


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## Baby boomer (4 Jan 2021)

Hmmm, interest rate is a bit steep for secured borrowing with a low LTV.  Still, a very good product for the asset rich, cash poor.  

Now if it could be combined with an annuity type product to give a regular income....


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## DK123 (4 Jan 2021)

Hi.Does anyone know if one [a single person aged 70] is registered under the rent a room scheme on their private residence do they have to cease this scheme first if they want to qualify for seniors money loan on it.Thanks.P.S.Also why is Ireland so far back with simply giving normal morgages and remorgages to seniors  who can afford it  with repayment terms up to age 80 and 90 years of age same as  in the United States and in British building societies where not to do so is considered discrimination against senior citizens.Thanks.


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## Brendan Burgess (4 Jan 2021)

Baby boomer said:


> Now if it could be combined with an annuity type product to give a regular income....



I understand that in the UK, there are products which pay out a monthly or annual amount, so that people are not paying interest on money they don't need. 

But with much higher pensions in Ireland, I suspect that most people borrow the money to refurbish their homes.

Brendan


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## Brendan Burgess (19 Jan 2021)

The Irish Times covers it here:









						Lifeline or life sentence? How equity-release lifetime loans work
					

Death triggers the loan repayment which can be a multiple of what was borrowed




					www.irishtimes.com
				




With extensive well-informed quotes from SBarrett.

Brendan


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## mtk (27 Jan 2021)

Liveline  show on at the moment discussing  "life loans" issued in 2000s. Seems to be aggrieved "children" mainly.
pity imho as this can be a good product.


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## Brendan Burgess (27 Jan 2021)

i have called to try to get on to defend them


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## Gordon Gekko (27 Jan 2021)

Did you get on?

This is an excellent product for its target market.

Less so for greedy children.


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## Steven Barrett (27 Jan 2021)

Gordon Gekko said:


> Did you get on?
> 
> This is an excellent product for its target market.
> 
> *Less so for greedy children.*



I want my parents to live out the rest of their lives in misery and the cold so I get the full value of my inheritance!!!


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## Brendan Burgess (27 Jan 2021)

Gordon Gekko said:


> Did you get on?



No, but I rang towards the end of the segment. 

I will listen to the full podcast and call them again. 

Brendan


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## midleton (28 Jan 2021)

Listening to people ringing in today to Joe Duffy show it was awful to hear the stories of older people who took out these loans on their homes if e.g they needed money to support a spous needing a nursing home and the cost of those. on a weekly basis  People were left owing huge amounts way above the initial loan figure taken out. People were left owing the banks money when a parent had passed away and their home was sold.  It was just awful to hear these stories.  I felt huge anger at the banks putting vulnerable people through such awful trauma. The stories were like we often heard of these money lenders except this time it was our banks.


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## Brendan Burgess (28 Jan 2021)

midleton said:


> I felt huge anger at the banks putting vulnerable people through such awful trauma.



I presume you are being serious and not sarcastic? 



midleton said:


> People were left owing huge amounts way above the initial loan figure taken out



That is what interest is. It accumulates if they don't make any repayments?

These people took out loans 10 or twenty years ago.  They needed the money.  They were given a full and clear illustration of how much it would grow to. 

They were under no pressure from the bank to take out these loans. 

They got independent legal advice, so that they knew what they were doing.

The Bank of Ireland did want them to involve the children in the decision, but the Law Society objected strongly to that. 

Brendan


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## Monbretia (28 Jan 2021)

Plus none of those on the show  took out the loans to pay for a spouse in a nursing home, that would not be a good reason to take out one because of the Fair Deal situation.   The two examples I heard mentioned wanted to help kids with deposit and education and other one was to travel to see children/grandchildren abroad regularly. 

If I remember correctly the value of the house was the upper limit the loan could accumulate to so you didn't end up owing more than the value on death.    I'm no major fan of banks despite working in one for years but really they are not the VdeP, they are going to want interest on their money!

Nobody on mentioned and Joe didn't ask  what alternative these people had to get a few bob to do the things they wanted to in their later years, now I don't think I'd borrow to help kids out unless it was serious need but to make your own life more comfortable or to travel etc then I don't see the problem.

I know I would have encouraged my father to go for this in his later years but the product had disappeared at that stage, he could have used the money to make his house more comfortable and improve his life in several ways, yes there is a cost in interest but that's the way it works, obviously it would be better to make repayments monthly on the loan but the whole point is it's for people who have the asset but not the income.   So what if there was no surplus left in the house value at the end!   Other alternative is that family who want to inherit any value help out earlier on when it's needed but they are not always in a position to do either.

I think this sort of product definitely has a place and is needed by some but the interest rate is the problem or at least it was when those particular loans were taken out, not sure what rate is being charged now on the relaunch but if it was low enough I can't see the problem IF people know exactly what they are getting into, very few really read the small print or even listen to what they are being told in a lot of cases.

I hope they call you back Brendan and have you on, there really should be some balance to that discussion.


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## Allpartied (28 Jan 2021)

Can the applicants ask for an interest only payback option?

That could be paid by the children or those who will inherit the property.  It would, at least, mean that the loan remains stable and doesn't accumulate compound interest.


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## Brendan Burgess (28 Jan 2021)

BoI life loans have mostly finished their 15 year fixed rate period. The current variable rate is 3% so the kids can pay this or more if they wish. 

The seniors money life loan allows annual repayment of 10% of the amount borrowed, so yes the kids can pay the interest


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## Gordon Gekko (28 Jan 2021)

I’m listening to it now.

It’s farcical, an absolute embarrassment. I think I’m listening to Gift Grub rather than Liveline.

The first lady borrowed €80,000 to help her daughter to buy a property and to buy a car.

At the time the property was worth €600,000.

It fell in value to €400,000.

She now owes €204,000 and the house is worth €550,000.

And she’s giving out and going in to the bank asking them to “meet her half way”.

She’s weeping about not wanting to “having to give her house to The Bank of Ireland when she dies”.

Get off the stage!


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## NoRegretsCoyote (28 Jan 2021)

Gordon Gekko said:


> The first lady borrowed €80,000 to help her daughter to buy a property and to buy a car.
> 
> ........
> 
> She now owes €204,000 and the house is worth €550,000.



Sounds like about 8% over 15 years.

Were they the rates on offer?


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## Brendan Burgess (28 Jan 2021)

From memory I think it was 6.9%


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## RedOnion (28 Jan 2021)

NoRegretsCoyote said:


> Sounds like about 8% over 15 years.
> 
> Were they the rates on offer?


6.7%, fixed for 15 years

Edit: just checked, and different rates were available at different dates. So it doesn't on when it was first taken out.


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## Allpartied (28 Jan 2021)

Gordon Gekko said:


> I’m listening to it now.
> 
> It’s farcical, an absolute embarrassment. I think I’m listening to Gift Grub rather than Liveline.
> 
> ...



Although we cannot be sure that the implications of the loan were clearly laid out to the borrowers. 

Can you really see a BofI salesman, paid on commission, telling an elderly applicant that there is a very real risk that the entire house will become the property of the bank, within 10 or 15 years.   

I know the legal documents are full of warnings, but the salesman should be obliged, by law, to demonstrate clearly the implications of these high interest loans. 

A simple chart demonstrating how the debt will grow, each year.  You know, like the ones they show us when they are getting us to invest in their pension schemes, or equity funds.  The only difference being the 8% growth on the debt, each year, is guaranteed, rock solid.


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## NoRegretsCoyote (28 Jan 2021)

RedOnion said:


> 6.7%, fixed for 15 years



Thanks, I'd mis-read €204k as €240k which sounded too high.


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## RedOnion (28 Jan 2021)

Allpartied said:


> A simple chart demonstrating how the debt will grow, each year.


Yes, this was in the standard brochures, illustrating the growth over 15 years. I'll try upload a copy later when I'm at PC.

Remember, in the main, these were products that the customer asked for. It's wasn't sales people ringing up elderly customers offering it to them out of the blue.  The customer had to have a solicitor before they could get it, and were encouraged to get independent financial advice and discuss it with their families.

Put yourself in the mind of someone in their 40s in 2006. Property prices were increasing more than the interest rate being charged. People didn't care. They wanted money now, their parents were sitting in a big house worth a fortune. And yes, in my opinion the majority of borrowers who took big sums were doing it to help their families rather than live a more comfortable life themselves.

In my opinion, someone in their late 80's shouldn't be worrying about not having anything left to pass on to their children. And their children should be making sure they're not worrying about it.


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## RedOnion (28 Jan 2021)

Gordon Gekko said:


> It’s farcical, an absolute embarrassment. I think I’m listening to Gift Grub rather than Liveline


How could I not listen after that review?!!


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## Leo (28 Jan 2021)

Allpartied said:


> Can you really see a BofI salesman, paid on commission, telling an elderly applicant that there is a very real risk that the entire house will become the property of the bank, within 10 or 15 years.



I can, but people just don't want to hear it. Look at the number of threads on here over the years from people who make no attempt to read the most basic T&Cs before entering a contract.


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## Leo (28 Jan 2021)

RedOnion said:


> In my opinion, someone in their late 80's shouldn't be worrying about not having anything left to pass on to their children. And their children should be making sure they're not worrying about it.



"But it's my inheritance Joe! Sure, my parents scrimped, saved, and deprived themselves of simple pleasures for decades to pull it together, but now I demand they give me a lump sum to buy a house without affecting the big lump sum I'm entitled to when they kick it!"

/rant


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## Gordon Gekko (28 Jan 2021)

But also, the first lady’s house is now worth €550k and she owes €204k.

She’s fine.

This has all the hallmarks of greedy children eyeing up their inheritance.

The beauty with the new Seniors money product is that you can repay 10% each year and/or clear it after 10 years.

So the children can make sacrifices if they so wish and clear it for their parents.


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## RedOnion (28 Jan 2021)

Gordon Gekko said:


> The beauty with the new Seniors money product is that you can repay 10% each year and/or clear it after 10 years.


Good point.  Actually, there's nothing to stop the BOI being repaid either, my understanding is that it's allowed in the terms.  However, there's a break fee calculation during the fixed rate period (15 years). But once that period is up, it's a variable rate.


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## Brendan Burgess (28 Jan 2021)

Liveline called me back and said they would try to include me in the programme but can't guarantee it because they get so many calls. 

Brendan


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## RedOnion (28 Jan 2021)

Attached are example BOI Life Loan brochures from 2004 & 2007.


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## _OkGo_ (28 Jan 2021)

It's pretty shocking really the level of financial illiteracy that exists. 'Compounding' is thrown around as an excuse for not understanding what would happen but in both of those brochures, the 'Working example of a Life Loan' very clearly shows in real monetary terms what would happen over 15 years. It's hard to argue that you didn't understand when it is clearly stated that if you borrow €62.5k today, you will owe €158k in 15 years.

 I'm sure it made for great listenership figures for Liveline...


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## Gordon Gekko (28 Jan 2021)

I love how they talk about “the Bank of Ireland” with the same reverence that people of a certain age have for the local priest.

Would the families have shared the upside if the properties had doubled in value as they hoped/expected?


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## Reboot (28 Jan 2021)

The Brochures do seem to clearly and fairly explain the Product (at least as it was 14 years ago). 

Is it still the case with the 2021 Product, that the loan is repayable if the borrower leaves the home for > 6 months?
If a person sells their house, it's their choice and they're likely to have factored in the repayment etc. and have an overall plan. 
If a person dies, it's not great for them but it's as planned for this mortgage product. 
But a borrower may have to leave their home (to live with Carers or in a Nursing home), which is a tough time for everyone. In most cases, the elderly person would rather stay at home, so having to repay the loan within 6 months seems like a lot of extra stress. 6 months is not a long time to arrange for payment.


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## Monbretia (28 Jan 2021)

With yesterday's callers anyway I don't think the overriding thing was 'greedy children' looking for an inheritance.  The original caller was the elderly lady herself and I think it was clear she wanted to have something left to leave.  In the other cases yes it was the adult children ringing but one parent was already dead and other was in 90s I think so clearly unlikely to ring in.   I think it's kind of ingrained in older people to be leaving something after them and many do scrimp during their own lives to do so.  I really don't think greedy children as such are the drivers behind this, I think the people themselves needed/wanted the money for whatever reason and went ahead with a bit of a 'la la la' attitude even when explained to them.

I processed mortgages for many years, I'm reluctant to say I sold them as I never went out looking for anyone to encourage to take out a mortgage, they came to me!   No one wants a mortgage, no one gets up in the morning and thinks do you know what I'll got and get me a mortgage today, they want a house or the want the money for whatever reason, the mortgage is just a means to an end.   For that reason most people really don't look at the details, in all my years processing mortgages one customer only ever actually read the back page of t&cs before signing on the dotted line despite everyone of them being invited to do so first.


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## RedOnion (28 Jan 2021)

Reboot said:


> Is it still the case with the 2021 Product, that the loan is repayable if the borrower leaves the home for > 6 months?



"A Lifetime Loan becomes repayable when you permanently cease to reside in your home or pass away. "






						Lifetime Loans - Spry Finance
					

Key Features of a Lifetime Loan A Lifetime Loan is a mortgage loan secured against your home. You do not sell a share of your home. You borrow a cash sum using your house as security. You can use this money as you wish. This type of loan is designed to last for the rest […]




					www.spryfinance.ie


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## Brendan Burgess (28 Jan 2021)

i am on next


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## Bronte (28 Jan 2021)

Burgess in on right now.  Pointed out to Joe the truth of David's story.  Says why life loans are a good idea.  (apparently listener David was on before).

That the Bof I brochure is very clear.  Everything is listed.  Life Loans could be repaid at any time. They did not have to pay the interest for 15 years.  That people are desperate for loans, it's a good product for them. To go to an independent financial advisor.

Being given out to by one listener about Burgess's blood pressure.

Woman says there is no problem with the Fair Deal scheme. Because if you've a loan on the house you can't get the Fair Deal scheme

Siobhan - 6% compound interest, now 3%.  BB tells her she can go in and pay off the loan.  Fixed rate. So there is a penalty.

David Hall says:  BB is coming on for the banks as the banks won't come on !  Agrees on independent financial advice. Advises on enduring power of attorney.  Critical he says.

Hall says Life Loans are a Preditatory Product.  That when you are vulnerable/old/ill it's a problem.  Hall now attacking the banks of I, but Joe says it's not them anymore does the loans.  Now on about the Minister, the Department.  Most despicable product.  Hall on with populist nonsense. How the banks were bailed out and the poor woman who borowed money for her daughters wedding.

Tom Murray - advisor - says they should be banned.


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## odyssey06 (28 Jan 2021)

From boards.ie
*Joe: *And there are udder experts who will disagree with you Brendan
*Brendan:* Not on this Joe


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## Brendan Burgess (28 Jan 2021)

i'm on my own


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## Brendan Burgess (28 Jan 2021)

Bronte said:


> Pointed out to Joe the truth of David's story.



thanks to you post from 2016 Bronte


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## Bronte (28 Jan 2021)

Can't believe the nonsense I was hearing. They took out the money, their parents did, gave the money to their adult children.  Greedy adult children is what I'm hearing. Why didn't they borrow the money themselves. 

- Listener whose parent borrowed, told them nothing about it until going out to the car to give them the borrowed money.  Why didn't the child march the parent back in, repay the money immediately and cancel the product. 
- Listener upset over fair deal because they can't get the Fair deal as there is a 'loan' on the house. Whose fault is that. 
- David is in business, and was on the show in 2016.


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## odyssey06 (28 Jan 2021)

It'd be nice if we could hear from someone responsible who took out the loan and could speak positively as to what they did with the loan.


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## Bronte (28 Jan 2021)

Brendan Burgess said:


> thanks to you post from 2016 Bronte


Hi BB, not sure what you're referring to.  I wasn't on here for a while, but Joe loves ramping things up.


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## Bronte (28 Jan 2021)

David

Burgess said he borrowed 25 IEP.


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## gianni (28 Jan 2021)

Brendan, you are playing a blinder. Nobody likes to hear the truth... especially when it highlights their ignorance. 

I should know. I often have my ignorance highlighted and I don't like it. I usually keep quiet though when I'm exposed...


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## Bronte (28 Jan 2021)

New Listener James

191K owed.  Mother borrowed 75K to renovate and travel !! Mother in long term care.  He couldn't help his mother when she initially borrowed.  That his mother did need the money.  Greatest ...  The amount repaid was astronomical.  6% I think.  The family were not able to repay the loan.  House sold.  To clear debt they had to sell house.  And now house is sold there is no money for fair deal (so the state pays)

BB - you can repay you can repay all or part of the loan at any time, apparently this law doesn't apply to old loans.  Loan was over 14 years and *no repayments were made !!! *

BB reading from brochure: says it can be repaid in part .... *James then backtracked* and said he was not in a position to repay it.  5.5%.  BB says it's too high because of programmes like Joe's as nobody will go into this business.  

Hall interjects.  Bad banks. 

Joe going after BB.

The James comes with the emotion.  

Siobhan - elderly vulnerable people

BB if show was more balanced.  If people borrow money, pay nothing back, then of course they are going to be astronimical.

X: moral justice .........

Siobhan, BofI, vulnerable elderly people, draconion interest rates, immoral,


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## odyssey06 (28 Jan 2021)

We have to pay the loan BACK???
What did they think was going to happen.


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## Bronte (28 Jan 2021)

odyssey06 said:


> It'd be nice if we could hear from someone responsible who took out the loan and could speak positively as to what they did with the loan.


It would be nice if we could get actual figures and what they did with the money. All I've heard is greedy adult children who didn't help their parents.


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## Bronte (28 Jan 2021)

BB - a solicitor was involved in each loan for the borrower.  It was advised in the brochure to get independent financial advice. 

Listener now saying it's the solicitor fault !

BB says it's a formal mortgage type document, 

Joe reading: Borrower get money via Borrower's solicitor.  Must sign that you've had legal advice. 

All loans are compound interest in interest in response to a listener interjecting ...

Ann 6.1%, when she first purchased she was paying 15% on her mortgage.  

Hall on about the selling on of loans.  About how we pumped billions into banks. No return for ordinary people. game of golf....


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## Allpartied (28 Jan 2021)

The interest rate is too high and do you know why?  Because of programmes like yours Joe. 

Classic.


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## Bronte (28 Jan 2021)

BB explaining to Joe how solicitor's work !!

Joe says people didn't see it as a mortgage. They saw it as a trip to Australia.


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## Monbretia (28 Jan 2021)

No one has yet given an option for what the older person can do if they need money for a reasonable reason, such as improving their house for their old age.  Someone say there are other options but no says what they are, there isn't unless your children can raise the money to give you.


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## RichInSpirit (28 Jan 2021)

Speaking as a bit of a gambler one of those elderly people who borrowed the money was a total shark. It was a sure thing only that they lived about 15 years longer than planned.


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## Bronte (28 Jan 2021)

This is the maddest radio I've heard in ages.


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## Bronte (28 Jan 2021)

Monbretia said:


> No one has yet given an option for what the older person can do if they need money for a reasonable reason, such as improving their house for their old age.  Someone say there are other options but no says what they are, there isn't unless your children can raise the money to give you.



- loan sharks
- credit unions


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## Monbretia (28 Jan 2021)

Bronte said:


> It would be nice if we could get actual figures and what they did with the money. All I've heard is greedy adult children who didn't help their parents.



Children can't always afford to help parents either as parents in 70s usually coincides with expensive college years or many other reasons.

When my father needed an extension to his house I would have gone for a life loan if they were available, my brother and I financed as much as we could, other siblings were not in a position to help due to their own situations.   It's not always as straightforward as kids give them money, many parents may not want to ask their children either.


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## Bronte (28 Jan 2021)

James Smith's partner's mother

- 12K in 2002 died 2012 bill 43K
- Partner did not know about loan
- Partner tried to make a repayment plan
- Her brother
- Loan has to be repaid on death

Joe says wow. 

Burgess, 6.9% max interest would be not be 43K now.  

James: paperwork.


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## Monbretia (28 Jan 2021)

Bronte said:


> - loan sharks
> - credit unions



Both will want regular payments from income which is what most of these people don't have.

PS loan shark rate would be a lot more too!


----------



## Bronte (28 Jan 2021)

Monbretia said:


> Children can't always afford to help parents either as parents in 70s usually coincides with expensive college years or many other reasons.
> 
> When my father needed an extension to his house I would have gone for a life loan if they were available, my brother and I financed as much as we could, other siblings were not in a position to help due to their own situations.   It's not always as straightforward as kids give them money, many parents may not want to ask their children either.



So in those circumstances a Life Loan is the best option. Or sell the house.  What other solution is there.


----------



## Bronte (28 Jan 2021)

Monbretia said:


> Both will want regular payments from income which is what most of these people don't have.


So once again Life Loans are an ideal solution.


----------



## gianni (28 Jan 2021)

Bronte said:


> James Smith's partner's mother
> 
> - 12K in 2002 died 2012 bill 43K
> - Partner did not know about loan
> ...



I think a major issue is the low level of financial literacy and numeracy.


----------



## Monbretia (28 Jan 2021)

Bronte said:


> So once again Life Loans are an ideal solution



I agree, they have a place and are suitable for some people.


----------



## Bronte (28 Jan 2021)

Hall says you can waive legal advice ! But the bank won't give you a Life Loan without a solicitor so I don't understand what Hall means.  

Ciara borrowed 45K - 137K. Not 100% on years.  Found out about the loan when they applied for it.  Never spoke about it after that.  House went below amount of borrowings.  Morals. They had paid off their house. Needed help from CC to put in adapted bathroom.  House sold, paid it off (I think bank lost out here).  

How would a bathroom cost 45K? Joe doesn't ask that.


----------



## Clamball (28 Jan 2021)

My husband was listening, he said there was one sensible man on (must have been you BB) otherwise he felt it was all about greedy adult children throwing their toys out of the Pram when they realised there was less value in the parents estate then they had thought.


----------



## RedDevil (28 Jan 2021)

You cannot get a fair hearing or make a balanced point when you are going against the emotional narrative


----------



## Bronte (28 Jan 2021)

gianni said:


> I think a major issue is the low level of financial literacy and numeracy.



I think there is a load of sculduggery going on.  Money wasn't actually needed or too much was borrowed for holidays and I suspect in many cases with pressure from children who wanted the money.


----------



## Brendan Burgess (28 Jan 2021)

Hi Bronte

Thanks for your brilliant analysis here:





__





						Bank of Ireland's Life Loan on Joe Duffy
					

Yes, a bank could offer such a scheme now.   There is no reason not to.   An elderly person can sell their house and give away the proceeds. The existence of the Fair Deal scheme does not stop them from doing so, unless they are already in the scheme.  Brendan



					www.askaboutmoney.com
				




I found it just before taking the call. 

Brendan


----------



## Brendan Burgess (28 Jan 2021)

I am wrecked.  Are there any bars open?


----------



## Bronte (28 Jan 2021)

Clamball and RedDevil are on the ball.  Joe never wants the truth, he ramps it up, controls the narrative in order to get more people on about the bad banks, evil lenders etc in order to keep the listeners calling in. Hall feeding the flames as he's a populist.


----------



## Sarenco (28 Jan 2021)

Monbretia said:


> Someone say there are other options but no says what they are, there isn't unless your children can raise the money to give you.


What about the Housing Adaptation Grant scheme?




__





						Housing Adaptation Grant for People with a Disability
					

Grants for alterations that need to be made to a home to make it suitable for a person with a physical, sensory or intellectual disability or a mental health difficulty.




					www.citizensinformation.ie


----------



## gianni (28 Jan 2021)

Brendan Burgess said:


> I am wrecked.  Are there any bars open?



Unfortunately there is no wide reaching forum for these issues to be discussed rationally (AAM is great but it doesn't reach 400,000 people daily).

You were literally quoting verbatim from the BOI literature that was supplied at the time while callers were giving approximate figures. Some callers even admitting they were not exactly sure of the details.

The facts were glossed over. The callers feelings were taking centre stage.

I think RTE were failing in their public service remit, in this instance.


----------



## Gordon Gekko (28 Jan 2021)

I can’t wait to listen to this


----------



## Sarenco (28 Jan 2021)

Allpartied said:


> The interest rate is too high and do you know why?  Because of programmes like yours Joe.
> 
> Classic.


I think that was my favourite line in the whole show.

Joe didn't like it one little bit.


----------



## Brendan Burgess (28 Jan 2021)

RedOnion said:


> Attached are example BOI Life Loan brochures from 2004 & 2007.



Red. 

They were such a great help to me. Thanks.

I had sent them into the show and while Joe Duffy had not seen them before going on air, I don't think he will be able to read them and make another show on this product.  

There was no mis-selling of this product. 

Brendan


----------



## Brendan Burgess (28 Jan 2021)

Allpartied said:


> The interest rate is too high and do you know why?  Because of programmes like yours Joe.
> 
> Classic.



I didn't get a chance to finish this point.

The banks won't do these loans because of the reputation risk 15 years later when the kids go onto Joe Duffy. 

In the UK, you can get a Life Loan for under 3%.  That is because there are many providers. 

We have only one provider and only one product. 

Brendan


----------



## Allpartied (28 Jan 2021)

Despite Brendan's valiant efforts it looks like the kind of products available in the UK will not be available in Ireland. 

Ironically, as he pointed out on the programme, the loans only appear astronomical because of the high interest rates charged, which is due to the total lack of competition.

Pensioner mortgages, lifetime loans with various repayment options, or rollover loans, interest only products, retirement loans ( up to age 95!). All available from a range of providers in the UK. 

Lots of people are sitting on huge assets, which they have paid for their whole lives, but living, day to day,  on the state pension.  

With proper advice and informed education of borrowers, this could be a god send for many people.


----------



## RedOnion (28 Jan 2021)

Allpartied said:


> Ironically, as he pointed out on the programme, the loans only appear astronomical because of the high interest rates charged


At the time these products were available before, the rate was relatively competitive. In March '04, the yield on 10 year government debt was c. 4.2%. the rate available on these was 6.25% fixed for 15 years.

The rate only appears high because rates have fallen so much since.


----------



## odyssey06 (28 Jan 2021)

The solution to all this negative publicity is only give life loans to someone with no children... but that would probably fall foul of some pesky equality legislation. 
We didn't hear from all the people who were happy with the loans, presumably cos there were none of their children on whinging about their lost inheritance.


----------



## Allpartied (28 Jan 2021)

RedOnion said:


> At the time these products were available before, the rate was relatively competitive. In March '04, the yield on 10 year government debt was c. 4.2%. the rate available on these was 6.25% fixed for 15 years.
> 
> The rate only appears high because rates have fallen so much since.



That's true, but the current provider, Spry Finance is still charging over 5% interest.  After 20 years a 100k rollover loan would cost 200k in interest, leaving a repayment charge of 300k. 

 Whereas the UK equivalent, charging 2.7% would cost 72k, leaving 172k to repay. 

The reason, as Brendan pointed out, is because no main street bank  wants to touch these products with a barge pole.  This is mainly due to the adverse publicity they will get, 20 years down the road, when they look to get the loan repaid. So, we are left, with one provider, who can charge as much as he can get away with.  People will still avail of this product, it will just be much more expensive than it is in other countries.


----------



## gianni (28 Jan 2021)

odyssey06 said:


> The solution to all this negative publicity is only give life loans to someone with no children... but that would probably fall foul of some pesky equality legislation.
> We didn't hear from all the people who were happy with the loans, presumably cos there were none of their children on whinging about their lost inheritance.



Not so sure. Where there's a will, there's a relative.

Aggrieved nieces/nephews would be the order of the day!


----------



## Brendan Burgess (28 Jan 2021)

If anyone wants to compile a list of serious factual errors in the two shows it would be well worth sending it to Joe Duffy.  Off the top of my head.

1) You can't pay a Life Loan off early - yes you can.
2) You can't part pay a Life Loan off  - yes you can.
3) If you pay a Life Loan off early you must pay all the interest for the remainder of the term up front - No you don't. You pay a break fee.
4) You can waive the requirement to consult a solicitor.  From the brochure "Do I need a solicitor? Yes. It is a condition of the loan that all borrowers obtain independent legal advice. You may also wish to involve your family or anyone else likely to be affected by your decision."
5) David yesterday:  25k turned in 85k in 12 years - repeated multiple times  ( it was IR£25k and it was 14 years)
6) James Smith today: €12k borrowed in 2002 became €43k by 2012.
7) They didn't tell you the implications of compound interest  - here is the extract from the brochure





8) Can't remember it exactly but a woman said that her mother had borrowed €50k and it rose to €100k. When they rang BoI to pay it after the mother died, BoI told her that she was very lucky, that a week later they would have taken the whole house worth €300k.
9)  Minor one:  The interest rate after 15 years is 3% fixed.  No it's not, it's 3% variable.

I am sure that there were others.


----------



## odyssey06 (28 Jan 2021)

gianni said:


> Not so sure. Where there's a will, there's a relative. Aggrieved nieces/nephews would be the order of the day!



They don't have the same emochunal standin as a (grieving) son or daughter.

People on the show were using 'compound interest' as an exclamation point, as if they were shocked *shocked* that such a thing existed and happened to ordinary people.


----------



## RedOnion (28 Jan 2021)

odyssey06 said:


> as if they were shocked *shocked* that such a thing existed and happened to ordinary people


Criminal! The whole thing was criminal!


----------



## Gordon Gekko (28 Jan 2021)

Punter: “But people don’t know the dangers of these products”

Joe: “But to be fair, I’m looking at the website and there are five separate warnings. But then, if a product requires five separate warnings, should it be allowed at all?”

I’d forgotten how comical Liveline is. Absolute gombeenery and Paddywhackery.

“The tracker people got something and we should get something.”

“I’m just asking the bank to meet me halfway...”

“We own the banks...we bailed them out.”

WHY YOU CLOWN?!


----------



## Monbretia (28 Jan 2021)

Sarenco said:


> What about the Housing Adaptation Grant scheme?



Yes and very handy it is, approval slow and you really have to need it from a physical point of view, payout even slower but we got the max grant at the time and spent as much and more again to make the house somewhat comfortable.  It pays for the basic works from the disability point of view of bathroom etc  there was a lot extra needed to actually finish what was needed.   It's some help but never covers all the work so some cash contribution is going to be needed from somewhere.

Not everyone is actually disabled though and might like a bit of updating of house re heating for example when older and a decent comfy couch to sit on etc


----------



## Gordon Gekko (28 Jan 2021)

“There could be someone in Rathgar with a house worth €1.8m who took out a few bob and their house is probably still worth €1.8m...but the normal people!”

“These bankers in pinstripe suits...”


----------



## Brendan Burgess (28 Jan 2021)

Gordon Gekko said:


> I’d forgotten how comical Liveline is. Absolute gombeenery and Paddywhackery.



Thanks very much Gordon!


----------



## Gordon Gekko (28 Jan 2021)

Brendan Burgess said:


> Thanks very much Gordon!



I felt genuinely sorry for you. It was like you were trying to explain fire to cavemen.


----------



## Gordon Gekko (28 Jan 2021)

“The last most despicable product” according to David Hall. “There are cheaper alternatives. Paying 6% to a bank that we pumped billions into!” 

I’d love to see those cheaper alternatives.

The “do you know why the rate is so high? Because of programmes like this!” is just an epic comment.


----------



## jupiter (28 Jan 2021)

Great product for people with no children. Ireland's inheritance tax laws ignore any principles of equality. No children? No nephews or nieces? Take a look at how much Revenue will hoover up in inheritance tax. 
If the choice is to leave the value of your house to a bank or to Revenue when you die, then you might as well choose the former and enjoy some cash while you're alive.


----------



## Sarenco (28 Jan 2021)

jupiter said:


> If the choice is to leave the value of your house to a bank or to Revenue when you die, then you might as well choose the former and enjoy some cash while you're alive.


Alternatively you could leave your house to a charity.


----------



## NoRegretsCoyote (28 Jan 2021)

Brendan Burgess said:


> 1) You can't pay a Life Loan off early - yes you can.
> 2) You can't part pay a Life Loan off - yes you can.
> 3) If you pay a Life Loan off early you must pay all the interest for the remainder of the term up front - No you don't. You pay a break fee.
> 4) You can waive the requirement to consult a solicitor. From the brochure "Do I need a solicitor? Yes. It is a condition of the loan that all borrowers obtain independent legal advice. You may also wish to involve your family or anyone else likely to be affected by your decision."
> ...



This is ridiculous.

Anyone can make a complaint to the Broadcasting Authority of Ireland (BAI) which has guidelines on "Fairness, Objectivity & Impartiality". These guidelines linked to here, but it seems broken ATM.

Someone (not Brendan I guess) would have to make an official complaint to RTÉ within 30 days on objectivity grounds first. If RTÉ's response is not satisfactory it can then be taken to the BAI.

Details on how to do it here.


----------



## Gordon Gekko (28 Jan 2021)

What was with the guy whose mother borrowed €12,000 over 12 years and claimed to owe >€40,000 at the end?

€12,000 @ 6.9% for 10 year is basically €24,000.

He made a throwaway comment about having gone to the Ombudsman or the Regulator and about the figures being verified.

But the numbers he was spouting just weren’t possible. It was nonsense.


----------



## jupiter (28 Jan 2021)

Sarenco said:


> Alternatively you could leave your house to a charity.


That's certainly another option, open to those with children too if they so choose.  Off-topic but the point is that those without children don't have the same choice of leaving 300K+ to an individual.


----------



## Brendan Burgess (28 Jan 2021)

Gordon Gekko said:


> What was with the guy whose mother borrowed €12,000 over 12 years and claimed to owe >€40,000 at the end?
> 
> €12,000 @ 6.9% for 10 year is basically €24,000.



Hi Gordon

His name was James. For some reason, I thought he sounded genuine.  Mistaken and misguided, but genuine. 

I contacted the programme afterwards to check his figures for him. 

It could well be that his mother borrowed €12 k , and then took out another loan of €12k without telling him. 

Brendan


----------



## RedOnion (28 Jan 2021)

Brendan Burgess said:


> 2) You can't part pay a Life Loan off - yes you can


I might have misunderstood the caller today, but I think his argument was that he couldn't make a part payment after the borrower had died, therefore a part payment wasn't possible? I might have misunderstood it.


----------



## Brendan Burgess (28 Jan 2021)

Hi Red

Absolutely no need to apologise. 

I make one small error in a long debate - and it was my understanding.

They made multiple outrageous and huge erroneous statements. 

Brendan


----------



## RedOnion (28 Jan 2021)

Hi Brendan,

No, you were correct.  My full point (which I didn't make) was that if the borrower died, it was a condition that the loan be repaid in full. Usually by selling the property.

During the lifetime of the borrower, partial or full repayments could be made.

It was difficult to follow bits of the conversation.


----------



## Duke of Marmalade (28 Jan 2021)

Compound interest?  An ordinary mortgage of say 30 years pays the bank back about twice what was lent, and that's with regular repayments.  What's the big shock in paying them twice over 15 years when there are no repayments?


----------



## Gordon Gekko (29 Jan 2021)

Duke of Marmalade said:


> Compound interest?  An ordinary mortgage of say 30 years pays the bank back about twice what was lent, and that's with regular repayments.  What's the big shock in paying them twice over 15 years when there are no repayments?



That’s a really good point that none of us have made specifically.

I think I’ll call “the bank” today and “ask them to meet me halfway”. 

When the Liveline listeners hear how much I’ll pay back over the lifetime of the mortgage, hopefully they’ll remind the bank that we bailed them out!


----------



## odyssey06 (29 Jan 2021)

RedOnion said:


> I might have misunderstood the caller today, but I think his argument was that he couldn't make a part payment after the borrower had died, therefore a part payment wasn't possible? I might have misunderstood it.



His phrasing seemed vague, almost deliberately so. He would say "we couldn't pay it back" without clarifying if he meant that they weren't allowed to pay or back, or didn't have the funds to pay it back.


----------



## Brendan Burgess (29 Jan 2021)

odyssey06 said:


> they weren't allowed to pay or back, or didn't have the funds to pay it back.



Agreed. I tried to tease this out. I think I made some comment along the lines of "Of course you couldn't pay it back if you didn't have the money." 

Brendan


----------



## _OkGo_ (29 Jan 2021)

Brendan Burgess said:


> If anyone wants to compile a list of serious factual errors in the two shows it would be well worth sending it to Joe Duffy.  Off the top of my head.
> 
> I am sure that there were others.



7) James assertion that his mother was in a position to get the Fair Deal scheme when she had an asset and the loan but that she was no longer eligible after they had sell the house because she 'no longer has an asset'.
This is simply not true, in fact her eligibility should have improved. I don't remember his figures but if, for example, she had a PPR worth €500k and a loan of €150k, she would have been assessed at 7.5% of €500k. By selling the PPR, the net proceeds of €350k would be assessed at 7.5% so it would have been an advantage to her if she was bordering on eligibility or not. What James was really not happy about was losing the 3 year PPR protection in the FDS and that her cash assets (his inheritance) would continue to dwindle beyond year 3 of FDS
To go a step further, if her only income was state pension (~€13k), 80% is assessed for FDS so approximately €10k. On average, nursing homes cost in the region of €60k per annum so for her not to be eligible for any contribution from the FDS, her remaining assets must be north of ~€660k (€50k/7.5%). 

8) Joe's continued reference to the people burdened by the repayments (the children) & 'What about the people who have to pay it back?'
No child or spouse had to pay anything. The life loans were repaid from the estate of the borrower, not from the pocket of the children. As executors of a will, they may have been involved in selling the property to clear the debt and felt like they were paying with their own money (the inheritance) but this is again factually incorrect.


----------



## RedOnion (29 Jan 2021)

_OkGo_ said:


> This is simply not true, in fact her eligibility should have improved


People get very confused, and mix things up.

You're absolutely correct re eligibility for the Fair Deal Scheme.
However, what people are no longer eligible for is the Nursing Home Loan Scheme (I can't remember if that's the correct name for it), which is secured against property.

There are 2 scenarios:
1. If they sell the house, there's no security. But now they should have the cash to pay their contribution.
2. If a life loan (or any mortgage) is secured against the property, you could be refused, as someone else has a first charge on the property.


----------



## _OkGo_ (29 Jan 2021)

Yes that is a fair point and it was more than likely the Nursing home loan (as part of the FDS) that James mother was not eligible for. I still think his statement that selling the property made her ineligible is inaccurate. I think he was well intentioned and not trying to mislead but that his understanding was just incorrect. In your 2 scenarios, she would be ineligible for the nursing home loan either way but at least with cash after the sale, there is no longer a need for that loan

I can see how the life loan gets messy when it is a couple who are asset rich/cash poor and one spouse needs the FDS. The life loan prevents them from getting the nursing home loan so that puts severe pressure on their affordability of their assessed contribution. It would likely be higher than their joint income could cover. And because one spouse needs to remain living in the PPR, they will not be able to sell the PPR to fund their contribution to the scheme


----------



## Odea (29 Jan 2021)

When Duffy said to Brendan "Give over dis oul guff now" it really showed how professional a presenter Duffy is.  I will make a complaint to RTE about the way Duffy treated Brendan. Wouldn't let him talk and went in to more ad breaks than he ever had on that segment of his show. Duffy just does not like being put in his place with actual facts.

Read back through these.

Your line is weak but your point is strong: Liveline from 10th January - Page 313 - boards.ie


----------



## gianni (29 Jan 2021)

Odea said:


> When Duffy said to Brendan "Give over dis oul guff now" it really showed how professional a presenter Duffy is.  I will make a complaint to RTE about the way Duffy treated Brendan. Wouldn't let him talk and went in to more ad breaks than he ever had on that segment of his show. Duffy just does not like being put in his place with actual facts.
> 
> Read back through these.
> 
> Your line is weak but your point is strong: Liveline from 10th January - Page 313 - boards.ie



The number of ad breaks, while deliberate, wasn't an effort to silence Brendan. I would imagine that they must take X number of ad breaks per show (Joe's salary ain't cheap). 

It was just poor management of the running time of the show. I don't think that aspect of the show was unfair towards Brendan.


----------



## Odea (29 Jan 2021)

gianni said:


> It was just poor management of the running time of the show. I don't think that aspect of the show was unfair towards Brendan.


He definitely had more ad breaks during the Brendan segment of his show than normal. He had a guy on the other day that he let ramble on and on for a long period with no ad breaks. He also dropped the "washer hands" bit that he has being doing for the past year because he was so rattled at someone not agreeing with his stance.

The people on the show were 3rd party people who now realise that their inheritance has gone on interest to the banks. Nothing else.


----------



## Duke of Marmalade (29 Jan 2021)

@_OkGo_ In a certain sense FDS is all about inheritance.  In your example the position of the Estate is very marginally impacted by the alternatives.  The difference between the two cashflows to the Estate are 7.5% of 150k for 3 years versus 7.5% of 350K after 3 years.  Depending on life expectancy not much difference.


----------



## gianni (29 Jan 2021)

Odea said:


> He definitely had more ad breaks during the Brendan segment of his show than normal. He had a guy on the other day that he let ramble on and on for a long period with no ad breaks. He also dropped the "washer hands" bit that he has being doing for the past year because he was so rattled at someone not agreeing with his stance.
> 
> The people on the show were 3rd party people who now realise that their inheritance has gone on interest to the banks. Nothing else.



Agreed, he had more breaks than usual in that segment. But I'd speculate that the overall number of breaks in the show was the same as normal.


----------



## Brendan Burgess (29 Jan 2021)

gianni said:


> Agreed, he had more breaks than usual in that segment. But I'd speculate that the overall number of breaks in the show was the same as normal.



I don't think that there was any conspiracy.  He has 1  hour and 15 minutes and x ad breaks.  He probably didn't want to interrupt the flow at the start and missed a few.   Anyone can listen back and count them. 

Brendan


----------



## RedDevil (29 Jan 2021)

There is always a conspiracy you were interrupted constantly and there was a dissportionate number of ad breaks whilst you were on.


----------



## Brendan Burgess (29 Jan 2021)

Against that, he came back to me on quite a few occasions to get my response. 

Brendan


----------



## RedOnion (29 Jan 2021)

Leper said:


> Such loans were withdrawn in 2002 and launched again in 2020.


To clarify:  These products were withdrawn in November 2010.

A point overlooked is that many were loss making.  Across all providers.  That's the main reason they were withdrawn.

Then, the CBI mortgage measures effectively made them impossible to issue as there was a lending cap based on income.  These rules changed in 2019 removing that barrier.

I doubt we'll ever see a bank issue these products again.


----------



## Allpartied (29 Jan 2021)

Leper said:


> I listened to yesterday's show on the radio player:- Liveline (rte.ie)
> 
> I should point out that on another thread on this forum I compared "Life Loans" to giving sweets to a child and for the record I am against such loans. The following is my opinion of what happened on the show:-
> 
> ...



I'll give you a simple example of how these loans, properly regulated and with education of borrowers, can be beneficial. 

My mother lives in London, on a council estate, in quite a swanky part of the capital.   She is a  council tenant so can't avail of the scheme.  She does benefit from the tenancy, in that any substantial maintenance is paid by the landlord ( the council).  Her next door neighbour bought the house from the council in the 1980's and owns the property, mortgage free. 

The neighbour is living on the basic state pension,  about 180 pounds a week.  She gets some help for winter fuel bills. 
Other than that she has very little income.  Her children are living in London, servicing huge mortgages, so they can't help her much. So she lives in relative penury, week to week.  Unable to upgrade furniture, or household items.  No holidays or meals out.  Not much in the way of luxury.  

 However, her house is worth, approx 700k on the market.  She's sitting on a gold mine. 

In the UK there are dozens of products available to such pensioners.  The one she took out,  with the full knowledge of her children, is a Retirment Drawdown loan.   This product gives her a lump sum, say 200k, which she can draw down at any time.  She can draw down a small amount, or the whole lot, or take a regular chunk each month.  She doesn't pay interest on anything she doesn't drawdown.  The interest on anything she does drawdown can be paid off each year, or it can be left to rollover until she dies or vacates the property.  

I don't know the interest rate, but the adverts in the UK , quote rates as low as 1.8%.  

She is never going to qualify for any other kind of loan, because she doesn't have the income to service a loan. 

I fail to see what is wrong with such products.


----------



## Leper (29 Jan 2021)

Nice post, Allpartied and I am delighted for your mother. I note she is paying interest @ 1.8%; the Irish equivalent Life Loan runs at just a little over 6% compound interest.


----------



## Coldwarrior (29 Jan 2021)

Leper said:


> Nice post, Allpartied and I am delighted for your mother. I note she is paying interest @ 1.8%; the Irish equivalent Life Loan runs at just a little over 6% compound interest.


Because there's competition for these products in the UK and no competition here (only one company offering them). Part of the reason there's not more company's offering them here is there's a big reputational risk when the "hard done by" children of people who took out the loans go on national talk show radio and are allowed to sprout mistruths and FUD, largely unchallenged by the presenter.


----------



## Allpartied (29 Jan 2021)

Leper said:


> Nice post, Allpartied and I am delighted for your mother. I note she is paying interest @ 1.8%; the Irish equivalent Life Loan runs at just a little over 6% compound interest.



So, how do you get more competition, more banks to get involved and a lower cost for such products. 

One way would be to have a rational, factual discussion about these products and how they work. 

Unfortunately, Joe Duffy torpedoed that with his show this week.


----------



## Allpartied (29 Jan 2021)

Leper said:


> 1. Joe Duffy didn't torpedo competition between financial institutions. Ridiculously high compound interest rates did.
> 2. BoI were invited onto Joe Duffy's radio show. They refused to attend or comment. Joe Duffy can only play what is in front of him so say something silly (or even sound silly) or fail to show up he'll be on that like a fly to flypaper.
> 
> My advice to anybody wishing for publicity:- Don't set yourself up as a stool pigeon if you don't want to be shot at.



But there isn't any competition at the moment.  There is only one institution willing to provide these very useful products. Why is that?  

The high interest that BofI were charging in 2005, wasn't actually very high at all. 

Average variable rate mortgages were charging about 4.5 to 5% in 2003/4.   So a 15 year fix rate at 6.9%, while expensive, was pretty reasonable. 

Of course, if you don't pay a penny on your loan, for 15 years, it's gonna cost you a lot in interest, whatever interest rate your paying.


----------



## Leper (29 Jan 2021)

The title of this thread is:- Life Loans are Back.

Are they gone?


----------



## NoRegretsCoyote (29 Jan 2021)

Allpartied said:


> Average variable rate mortgages were charging about 4.5 to 5% in 2003/4. So a 15 year fix rate at 6.9%, while expensive, was pretty reasonable.



The 2004 rate advertised was 6.25%. Irish government borrowed on average at 4.1% over ten years in 2004. 

The life loan seems pretty reasonably priced given volumes weren't huge and it was an open-ended commitment by the bank. 

A few 65-year-olds would have borrowed in say 2005 and will live until 100. Bank won't see its principal until 2040 - longer than most mortgage terms!


----------



## odyssey06 (29 Jan 2021)

Leper said:


> The title of this thread is:- Life Loans are Back.
> Are they gone?



They seem to have disappeared from Irish market, no lenders were offering them.




__





						Why Bank of Ireland does not do Life Loans anymore
					

People often ask why an older person can't borrow money on the strength of their mortgage-free home.   I was in the Registrar's Court yesterday.   Life loan of €360k given in Dec 2008  Interest rate: 6.9%  Owner died 11/2013  Probate not granted until March 2016  May 2017 - Joint executor wrote...



					www.askaboutmoney.com
				




A company is now dipping its toes into the water with an offering - see opening posts.

Cue Joe Duffy setting up a liveline programme to savage the concept with emotional calls from children whose parents blew their inheritance via a life loan for holidays, or in some cases the kids wedding!

Summary complete.


----------



## Bronte (29 Jan 2021)

1. *Interest Rates – Bank of Ireland Life loans/Senior’s Money – Loans for people in older age needing to borrow money based on their only asset, their home, as they have no income to repay a normal loan. Also known as Equity Release*

There were varying fixed interest rates available generally 6.7% to 6.9 %

15 years ago Home mortgage rates were around 5%. https://www.*****************.com/history-of-mortgage-rates-in-ireland.html

In no way can any poster or listener on Joe state that the interest rates were ‘high’.  Not for the product they were.  6% to 7% would be seen as quite reasonable in such a context.  You can’t today in 2021 with historically unbelievable low interest rates and negative interest on savings compare the rates now and then to say the rate is ‘high’.

Also if you compare the rates to current rates with Credit Unions what’s the big deal.  I myself can remember rates hitting 13% and my first mortgage was 9% which I thought was a good deal !  Now I think I’ve literally money for nothing because it’s so cheap.

Nobody asked any of the listeners if they had overdrafts or credit card debts.  What about those interest rates.

People in old age without the means have VERY good reasons for taking out such loans, home improvements, improving quality of life, converting homes for old age. And yes going on 50 cruise ships if THEY so wish. It's their home, their money. A fact hard to glean from the radio the last two days.

Products simply explained









						Seniors Money reopens ‘reverse mortgage’ loans for over-60s
					

Lifetime loans available to older borrowers again at fixed rate of 5.5%




					www.irishtimes.com


----------



## Bronte (29 Jan 2021)

2. *Marketing/Gouging/False promises/Evil Banks*

As demonstrated by Burgess with his link at the start of this thread *this is a very simple product*, akin to a mortgage, easily explainable. Even the most financially literate person can clearly read that simple well laid out brochure and understand what the product is.  And if people on the radio, who didn’t sound stupid to me are saying that their parents couldn’t understand these products then their parents should not be in charge of their pension much less their home. How did these people buy houses, manage weekly finances, pay utility bills bring up their children.

David Hall over and over, along with the Callers went on about bailing out the banks. What on earth has this to do with the topic.  Are the Callers and David suggesting that people should not repay money they borrowed freely.

Burgess is entirely correct to point out that shows like Liveline will make banks reluctant to offer this product.  It's also correct because of Irish people's attitude to debt and the amount of people who got away with paying nothing back that the interest rate on these loans are 'high'. (I don't consider 6% high but I'll leave that stand for now)

*





						Repayment Events - Spry Finance
					

Repayment Events The clue is in the name: A Lifetime Loan is designed to last for as long as you remain living in your home or as long as you live. The loan does not become repayable until one of the following ‘repayment events’ arises: Sell the home The loan is made against your specific […]




					www.spryfinance.ie
				



*
Basic simple stuff.  A child could understand it. With the most simplistic of warnings in clear writing at the end.


----------



## Bronte (29 Jan 2021)

3. *Legal Advise – Solicitor        Financial Advice – Independent Financial Advisor*

Each and every client only received a loan if they had independent legal advice.  Which from Liveline you’d be hard pressed to figure out. For those that were on the show and seemed misstified on how it works:  you go to the Bank to get the loan, they explain the product to you and tell you you must have a solicitor. You go to your solicitor who explains to you that the product you are buying is a life loan, and what it means. You sign a document stating you understand, your solicitor confirms this to the bank, the solicitor gets your cheque and transfers the money to the Client.

The Law Society is entirely correct that the Borrower is not to involve their childen in this. It's the parent's business.  It's the parent's decision and it's the parent's asset.  

*Financial Advice*

It was highly recommended to get Financial Advice, it’s not clear if many did, presumably because the product is quite simple they didn’t need financial advice.  OR they didn’t want to pay for it. OR they wanted the money. OR their adult children were pressurising them to get the loan to give to them to buy their own home, pay for a wedding, help out with children’s debt (consolidation) or to consolidate their own debts.


----------



## Bronte (29 Jan 2021)

4. *David Hall *- *the populist. *

All he does every time he’s on the radio is take a pop at the banks. He’s very careful to always side with the listeners.  He knows full well these were not bad products, not complex products. But he makes a living out of people who made stupid financial decisions so he’s not going to admit that it was people, particular their adult children who are at fault here.

Next, in no particular order - I'm a bit busy and will be back. Any corrections welcome, also for some reason my link to historical interest rates won't wok on AAM


Joe Duffy
Case study David.
Case study Siobhan
Brendan Burgess
other expert
Greedy adult children who have some neck.


----------



## RedOnion (29 Jan 2021)

Allpartied said:


> The high interest that BofI were charging in 2005, wasn't actually very high at all.


Ah, would you stop letting facts get in the way!


----------



## Bronte (29 Jan 2021)

*Case Study Ann - very lively sprightly with it 80 year old*

- Purchased 4 bed semi D in 1973 (purchase price anybody?) with a mortgage
- Paying 15% interest on mortgage  - she knows her interest
- Paid off 1990
- Sept 2005 borrowed a Life Loan from BofI of 80K value then 600K @ 6.1%, it was she instigated this
- said everything was explained to them, had to wait to get money as it wasn't easy
- Money used for a decent deposit on daughters house and to put their son through education, plus a car that they still have
- House in the crash was worth 450K
- Now worth 550K - she was cagey on this
- Owes 204K currently
- Last Sept she went to bank for them to meet her half way !
- If she lives 10 years the bank will own her house so she'd rather be dead
- After 15 years the interest rate is now 3%

*Observations*
- Joe is well able to calculate, he knew the loan was about 13% of the value, his saying they owed half a million turned out to be 204K
- Ann regrets her decision, feels she's trapped, well able to give us nonsense, gave us full details and then mentioned she'd problems with her eyesight suggesting to us she hadn't been able to read the documents, and then said she didn't hear about the compound interest when she took out the Loan, yet was able to clearly outline all figures and interest rates including her pride in paying off their mortage in 1990.
- wonder what pressure the daughter put on her
- wonder what the daughters house is worth now
- odd about the son in education when the parents were 65
- I suspect house is worth way more than 550K (anyone what is a vey nice semi D, 4 bed in nice area in Dublin worth?)

*Contradictions*
- said she thought her husband would die at 60 as all his family did, which given he was 65 when they took out the loan makes no sense
- not knowing interest
- saying she didn't know the loan would go up, up and up
- said she went to a financial advisor and he was no good - I suspect he told her to sell
- not being able to read
- son in college
- saying she thouht when the property value declined in the crash the bank would reduce the interest rate, which means she knew exactly tha the amount was going up up and up.

*Solution*
Sell house, realise €346 K, buy one bed, live more cheaply in a more manageable suitable for 80's property. Like what is the actual problem here. She could have done this years ago.  And she knew this already in 2016 as she listened to Joe on the subject then.  And this is a sob story !

*Opinion*

I think it's very sad an elderly woman feels bad that she's not able to let her children inherit, that's what this is about.  And I wonder what pressure is being put on her there.  She clearly did everything for her children and she doesn't want to give up her house which is her pride and joy.  So what if the bank gets it, she's not taking it with her, she fully knew what she was doing and she actualy has a choice right now, especially with rising propety prices but it's a choice she doesn't want to make, worse 4 years ago she could have moved.


----------



## RedOnion (29 Jan 2021)

Bronte said:


> - If she lives 10 years the bank will own her house so she'd rather be dead
> - After 15 years the interest rate is now 3%


This was actually a piece that upset me when I listened to it.  Not the facts, but the emotions the woman was going through, and I really hope the show reached out to this lady to offer her support after feeding on her emotions like this for the purpose of creating a radio programme.

Lets look at facts.
Currently owes 204k.  House worth c. 550k. (listeners figures)
Even if interest continued to accrue at 6% per annum (it's currently 3%), in 10 years time the balance would be approx 365k.

As you've noted, they could easily sell now, repay the loan, and have enough to downsize and owe nothing to anyone.


----------



## Bronte (29 Jan 2021)

RedOnion said:


> This was actually a piece that upset me when I listened to it.  Not the facts, but the emotions the woman was going through, and I really hope the show reached out to this lady to offer her support after feeding on her emotions like this for the purpose of creating a radio programme.
> 
> Lets look at facts.
> Currently owes 204k.  House worth c. 550k. (listeners figures)
> ...


And her kids would get the new property.  I suspect it's not the bank is the problem, it's the children's inheritance she's crying about.  

You're bonkers if you think Liveline will do anything. They feed off people like her.


----------



## rob oyle (29 Jan 2021)

Just listened back to the podcast from Wednesday and Thursday (better than listening live, the ads are it from the podcast). Did the topic come up on the show today?


----------



## RedOnion (29 Jan 2021)

rob oyle said:


> Did the topic come up on the show today?


No. They've move on for now.


----------



## odyssey06 (29 Jan 2021)

RedOnion said:


> No. They've move on for now.



To prize bonds...


----------



## Allpartied (29 Jan 2021)

Leper said:


> 1. Ask the financial institutions? I'm not their spokesperson.
> 2. "The high interest that BofI were charging in 2005, wasn't actually very high at all." - But you (repeat you) said it was "high."
> 3. "Pretty reasonable" and reasonable are not the same thing.
> 4. I never challenged the cost of not paying what should have been repaid.



1.  I think Brendan said that he had spoken to senior managers in AIB and they were not interested in these products, because of the bad publicity and the flack they would get from programmes like Joe Duffy's.  It's a pity because , with competitive rates, they can be good products.  
2.  It seems high now, because interest rates are historically low today.   Certainly the Spry offer is high, but they're the only players in town, so they can put out a rate and see what flies.  They don't mind the flack, because they are not a high street brand.


----------



## Bronte (29 Jan 2021)

https://www.*****************.com/history-of-mortgage-rates-in-ireland.html

1975    11.25%
1976     12.5%
1977     13.95%
1978     14.15%
1979     14.15%
1980     14.15%
1981      16.25%
1982      16.25%
1983      13.0%
1984      11.75%
1985      13%
1986      12.5%
1987     12.5%
1988     9.25%
1989    11.4%
1990    12.37%
1991    11.95%
1992    13.99%
1993    13.99%
1994     7.49%
1995     7.00%
1996    6.75%
1997    6.90%
1998    5.85%
1999    5.60%
2000   6.09%
2001     6.09%
2002    4.70%
2003    4.20%
2004    3.49%
2005    3.65%
*2006    4.86%*
*2007    5.46%*
*2008    5.86%*
2009   4.16%
2010   4.02%
2011    4.42%
2012    4.33%
2013    4.38%
2014    4.2%
2015    4.05%
2016    3.61%
2017    3.44%
2018        3.21%
2019        3.02%
2020        2.92%
Let's call a spade a spade. 6% is not by any means massive and 15 years ago even less so.


----------



## Conan (29 Jan 2021)

I see David Hall is now criticising our Dear Leader Burgess on LinkedIn. Typical populist stuff.


----------



## Gordon Gekko (29 Jan 2021)

“Life Loans are the greatest form of elder abuse”

This, in a country where old people were being strapped to radiators in nursing homes.

This horse manure needs to be challenged. The overriding issue is greedy idiot children who can’t wait to get their hands on their inheritance. They can’t make their own way in the world and need to inherit money. Their preference would be to see their parents freeze or fall down the stairs instead of taking a Life Loan out and upgrading their home.

That the real scandal: the greed and idiocy of lazy children who want handouts.


----------



## RedOnion (29 Jan 2021)

Bronte said:


> *2006 4.86%*
> *2007 5.46%*
> *2008 5.86%*


What that misses is the fact that these rates were FIXED for 15 years.

For comparison, I've included the 10 year fixed rate mortgages available from BOI at the time:
April 2004: 5.35% (20 year rate was 6.5%). 
LifeLoan 15 year rate was 6.25%

Unfortunately I can't seem to find many other historic rates.


----------



## Brendan Burgess (29 Jan 2021)

The show has been picked up on extra.ie. I am not sure what extra.ie is.

It reports on Wednesday's programme so they don't cover my rebuttal.

But here is the bit I found most interesting:

A Bank of Ireland statement to extra.ie

‘Lifeloan was set up on a 15 year fixed rate and at the end of the 15 year fixed period the product rolls to a variable rate (currently 3%). Customers can pay off the loan early if they wish, and many have done this.’

So, I was right all along, although two of the callers told me I was wrong.

Brendan


----------



## Bronte (29 Jan 2021)

RedOnion said:


> What that misses is the fact that these rates were FIXED for 15 years.
> 
> For comparison, I've included the 10 year fixed rate mortgages available from BOI at the time:
> April 2004: 5.35% (20 year rate was 6.5%).
> ...


I fixed our mortgage for 5 years back in the  for day 9.5% and? 

I broke out of it, paid my penalty and moved institution. 

Knew what I was doing, understood mortgage, interest rates, fixed variable. Have you a point?

Red onion can you tell me what exactly your post means. What exact interest rate are you saying the bank should have charged.


----------



## RedOnion (29 Jan 2021)

Bronte said:


> Have you a point?
> 
> Red onion can you tell me what exactly your post means. What exact interest rate are you saying the bank should have charged.


Yes... The rate on this product was consistent with the term rates for fixed rate mortgages at the time.

Your point was that the rates weren't high. I'm just agreeing with you, but going further and saying not only were they not high, but they were possibly close to normal interest rates.  There's no point comparing it to variable rates.


----------



## Gordon Gekko (29 Jan 2021)

Brendan Burgess said:


> The show has been picked up on extra.ie. I am not sure what extra.ie is.
> 
> It reports on Wednesday's programme so they don't cover my rebuttal.
> 
> ...



I think David Hall’s reference to you as “Burgess” on LinkedIn is very disrespectful.

I’m not sure what his game is. He was involved with the Make A Wish Foundation and I was at a table at a ball with him once and he seemed okay. He owns a private ambulance company. Then he springs up as an advocate for mortgage holders. I always assumed it was a grift to get ownership of the borrowers’ properties.

But there’s a way to carry one’s self and his appearance on Liveline and its aftermath aren’t it.


----------



## Leper (30 Jan 2021)

Coldwarrior said:


> Because there's competition for these products in the UK and no competition here (only one company offering them). Part of the reason there's not more company's offering them here is there's a big reputational risk when the "hard done by" children of people who took out the loans go on national talk show radio and are allowed to sprout mistruths and FUD, largely unchallenged by the presenter.



Bank of Ireland were invited to forward a spokesperson and they declined. The bank is entitled to decline, but it is not fair to say "mistruths and FUD, largely unchallenged by the presenter."

I note on Brendan's post above that Bank of Ireland made a statement to www.extra.ie (not a great source of news unless you are interested in the daily chores of supermodels) and I see no reason why they couldn't challenge any of the subjects on Liveline.


----------



## NoRegretsCoyote (30 Jan 2021)

Gordon Gekko said:


> He owns a private ambulance company.


Didn't he own a casino too?

I'm sure he has a very good understanding of risk so


----------



## Brendan Burgess (30 Jan 2021)

Gordon Gekko said:


> I think David Hall’s reference to you as “Burgess” on LinkedIn is very disrespectful.



I didn't bother reading it.  I don't take offence at anyone referring to me as Burgess.  Bronte does it all the time on Askaboutmoney. 

Most people know that he is a loose cannon. Being insulted by him doesn't really bother me.  If someone whose views were respected said what he said, I would be more concerned.




Gordon Gekko said:


> Then he springs up as an advocate for mortgage holders. I always assumed it was a grift to get ownership of the borrowers’ properties.



He is actually very well meaning.  His objectives are honourable. But his ego is huge.   He loves being on TV and radio and tweeting.  He makes money from a business which is absolutely fine.  And he spends a lot of time genuinely helping people.  But he does enormous damage paralysing people into inaction with talk of tsunamis of repossessions.  And, of course, he is also contributes to the very high mortgage rates in Ireland because he creates an atmosphere which makes repossessions impossible.  And, the taxpayer gets completely screwed by his Mortgage to Rent Scheme.



NoRegretsCoyote said:


> Didn't he own a casino too?



I understand that he had a small shareholding and was a director and Chairman for a while. When that article refers to it as "his club", I don't think that they meant that he owned it. 

Brendan


----------



## Bronte (30 Jan 2021)

midleton said:


> Listening to people ringing in today to Joe Duffy show it was awful to hear the stories of older people who took out these loans on their homes if e.g they needed money to support a spous needing a nursing home and the cost of those. on a weekly basis  People were left owing huge amounts way above the initial loan figure taken out. People were left owing the banks money when a parent had passed away and their home was sold.  It was just awful to hear these stories.  I felt huge anger at the banks putting vulnerable people through such awful trauma. The stories were like we often heard of these money lenders except this time it was our banks.


Do you want to rethink this maybe.  So what if adult sons and daughters had to pay back a loan their parents had taken out to fund the adult daughters wedding or sons house deposit, or taken out the money to hand it directly over to the son or daughter. Where is the evidence vulnerable people were put through awful trauma as I’m not seeing it.  Do you have any sympathy for older people who need to adapt their house in their older years and the only way they can do it is via this type of loan.  Nobody asked any of the adult sons or daughters why didn’t they borrow money to pay for the renovations on their parents houses. Or why they let their parents borrow money to fund their weddings or house deposits.


----------



## Bronte (30 Jan 2021)

Allpartied said:


> Can the applicants ask for an interest only payback option?
> 
> That could be paid by the children or those who will inherit the property.  It would, at least, mean that the loan remains stable and doesn't accumulate compound interest.


This would never work in practise. It also would be way too messy legally. As in which child would pay and who gets what.


----------



## Gordon Gekko (30 Jan 2021)

Bronte said:


> This would never work in practise. It also would be way too messy legally. As in which child would pay and who gets what.



The rate would be higher as well, as the risk/timeline would be greater.

The Seniors Money/Spry option is really good in that regard. You can pay it back over the first 10 years (up to 10% a year basically).


----------



## Duke of Marmalade (30 Jan 2021)

Gordon Gekko said:


> The rate would be higher as well, as the risk/timeline would be greater.


Not sure about that.  Fixed interest roll-up is the longest duration arrangement as it is in effect the commitment to onward lend future interest payments at fixed terms.
"Interest only"  was targeted at those who were income rich/asset poor,  which is generally the opposite of those who would be seeking Life loans. How were they going to pay the interest? From the State pension? In any event, they can always "pay" the interest at any time albeit possibly subject to break fees.


----------



## Conan (30 Jan 2021)

Unfortunately programmes like Joe Duffy thrive on “hard luck stories”, “victims of large institutions “ etc. The programme is more concerned with creating controversy, generating coverage than “truth telling”. I remember back to the start of the last “crash” when Joe spent a week encouraging people to withdraw their money from the Banks, suggesting that they were not safe (which itself would have resulted in the collapse of the Banking system). 
As for BoI going on the programme, they would have nothing to gain by joining a verbal battle with those who have no understanding of the product or no interest in the truth. There are still lots of people who believe that loans should not be repaid, that loans should be interest free, that Banks are the epitome of evil. BoI appearing on the programme would only give more oxygen to the controversy.


----------



## Bronte (30 Jan 2021)

*Case Study - Catherine, speaking for her mother*

- End of 2006 borowed 120K at age 67
- house value 800K
- widowed young and wanted to travel to see her2 children abroad, she has 3 children,
- Borrowings were based on 15% of the house value, now the loan is worth 50% of the house
- owes 288K (that's 120K capital and 168 interest)
- current house value 575K/600K
- last year the interest was 14K
- mother has no clear sense of compound interest being explained to her
- was given no clear proper breakdown, not clearly spelt out to her
- or about it being a big problem if she lived to a certain age, she is now 82
- mother very organised as regards paperwork
- felt she had no choice but to take loan
- shocked every year when she got the bank statement
- never talked about it
- upset about inheritence for her childen, she's living too long, feels pressure, feels her children would be better off if she were dead, guilty for being alive

*Observations*
A lot of the talk of how much is owed to the banks don't mention that the original 'Capital' is part of the 'bill'. No mention of why the daughter is not reassuaring her mother that it does not matter if there is no inheritence.

*Contradictions,*
That the mother keeps all her paperwork but yet we don't know of the original loan agreement and it's paperwork
You don't get a loan of this magnitude without proper paperwork.
Is 67 widowed young.  120K buys a lot of travel.

Also BB posted this in 2016:

_*I got a copy of the Life Loan documentation handed out when the mortgage was taken out.*_





						Bank of Ireland's Life Loan on Joe Duffy
					

Yes, a bank could offer such a scheme now.   There is no reason not to.   An elderly person can sell their house and give away the proceeds. The existence of the Fair Deal scheme does not stop them from doing so, unless they are already in the scheme.  Brendan



					www.askaboutmoney.com
				




*It's couldn't really be any clearer: 

Amount of Credit Advanced:  £100,000 
Period of agreement: The date of death of the borrower (estimated to be 16 years) 
Number of repayment instalments: 1 at end of period of agreement 
Total Amount repayable: £289,000 
Cost of credit: £189,000 *
_*APR: 6.9%*_

*Solutions*
Mother could have sold the 800K house, moved into a 400K house and had 400K to spend on travel and 'things'.   In year one when she saw the fist statement that 'shocked' her she could have paid back the 120K or the guts of it, and sold the house then.

Sell house now, she will have 288K.

*Opinion*
I find I hard to believe a very organised woman doesn't understand compound interest, it's not rocket science, find it difficult to understnad why she hasn't already sold the house, problem solved, and it's terrible she is made to feel guilty about her children's inheritence.  She is under no obligation to leave them anything.  This is coming up a lot.  I wonder what actually happened the 120K.


----------



## Bronte (30 Jan 2021)

*Case Study - David - he was on the show in 2016 and we discussed it at the time. *

- 2004 Mother was 82 and needed 8K for a car
- House worth 201K, offered 63K, took 25K, was offered 2.5 times value of home.  
- 2013 had dementia and made ward or court, loan now 68K, 2015 86K and died at age 96 in 2016
- bank took every penny owed
- mother was aken advantage of, she was religious and she used the money to go to Lourdes
- he's a business man all his life
- the banks screwed her, in 12 years 85K
- his story was published by Charlie Weston in the Indo


----------



## RedOnion (30 Jan 2021)

I mentioned earlier that many of these became loss making for the providers during the crash. This was mainly due to the fact that they could never create negative equity - the security was the property and the property alone. While a very simple product from a customer perspective, that simplicity makes them incredibly complex for the lender when it comes to capital requirements and accounting. There are no repayments, there's an inbuilt no negative equity guarantee which is an insurance against falling house prices, and without over simplifying it they act similar to a life assurance policy in that someone outliving the original assumptions can make it loss making.

In some countries, like the US, the products are seen as so important that the state stepped in and provided an 'insurance' against falling house prices. 

These products, properly understood, and used for the correct purposes, provide a means for people to live a comfortable life in retirement. How many of us know, or have known, elderly people rattling around large houses, but won't turn on the heating because either they can't afford it, or want to have something to leave after them for their children? Or can't afford upgrades to their homes that would make their life more more comfortable?  In the absence of being able to downsize within the community you want to live in, these can provide a very real service.

These work well, for both lender and customer, while house prices are rising faster than the interest rate. They don't work when house prices fall, the borrower used the money to leverage some other investment that's also lost value, or spent it on something to live beyond their means keeping up with everyone else.

For anyone interested in learning why we may never again see banks offer these products here, and therefore a lack of competition in the market, the following is a good general intro, without getting too technical. Although UK based, it largely applies here, including the capital regulation pieces.









						Risk and Equity Release Mortgages in the UK - The Journal of Real Estate Finance and Economics
					

Accessing elderly housing wealth through equity release mortgages (ERMs) continue to be the focus of policy debates about how to pay for social care and how to support retirement incomes in the UK. We demonstrate in this paper that the spatial concentration of this market in just a few regions...




					link.springer.com


----------



## RedOnion (30 Jan 2021)

Bronte said:


> - the banks screwed her, in 12 years 85K


I didn't relisten to the show, but these numbers make no sense.

However, it might make sense that IEP 25k was borrowed in 2001, and the loan would have been about 85k in 2016.  So 15 years, not 12, and different currencies.


----------



## Bronte (30 Jan 2021)

RedOnion said:


> I didn't relisten to the show, but these numbers make no sense.
> 
> However, it might make sense that IEP 25k was borrowed in 2001, and the loan would have been about 85k in 2016.  So 15 years, not 12, and different currencies.



Yes David was in Pounds but he, of course, once again, forgot to mention that.  His actual story I analysed fully in 2016 and BB put up the link to it.  Today I'm relating what we were told this week.

As for numbers making sense, wait until I get to Denise ......


----------



## RedOnion (30 Jan 2021)

@Bronte 
Thank you - sorry I hadn't connected the 2 in my head as being the same case. I'll wait til you've finished your analysis.


----------



## Bronte (30 Jan 2021)

*Case study Denise*

- 2001 Dad knowing he didn't have long to live took out a lifeloan so his wife would be secure.
- borrowed 50K (just under she said) for 15 years at 5.6% fixed
- 2004 he passed away and mother and daughter went to bank to repay the loan
- Met BofI CEO/the banks' legal people and the manager, told only option was to die or sell
- Was told they could not pay off the loan
- Denise bought the house
- This is where details are important to follow
- She said she had to pay the bank 120K.  Said she had to pay stamp duty, and the interest for the next 10 years even though the loan was being repaid, there was a lot of discussion on that
- but she made one throwaway remark, about '*value of the house*'.
- mentioned extortionate and that no one is allowed live in the house, which is because the bank don't want a son or daugher living there acquiring property rights.

*Observations*

We weren't told the full truth.  I believe, subject to others correcting me that what actually happened is not the bank was repaid 120K. Instead Denise bought the house from her mother at below market value.  That she paid BofI 60K of which 45/50K was the original capital.  (plus 4/5 years compound interest.  Stamp duty on a property of 300/400K in 2006 was 3%, so 12K.  5K solicitor, and 40 K gift tax.  (I haven't worked out gift tax but you have to pay that if you 'buy' an asset for less than full cost)

So far I've not been able to figure out if it's true she had to pay 10 years interest.  She said to Joe that the same thing happens when you pay back a mortgage early. Which is clearly not the case, I suspect it was a break fee she paid.

We never found out what the money was for.

*Contradictions*

Two things niggling me, that you can't repay early and that you've to pay future interest if you repay early

So let's have a look at the excellent and simple BofI brochure that BB posted up, the first one.  Page 12 state there is a break fee, the formula is Amount X (R-R1) X time /36500.    That sounds like the normal cost for breaking a fixed rate mortgage.  It's the same in the 2004 and 2007 document. In addition in both on page 7/8 that you can pay it back early, subject to the break fee on page 12. 

*Conclusions*
Denise did really well out of this.  She got the home, cheaply. a 300K or 400K for 120K. 

*Solutions*
None.   Denise managed to find a solution and her mother lives with her and is now 93 which sounds like a great solution so to be perfectly frank I've no idea what she was mad about.  Particularly as she managed to get a house out of it.


----------



## Brendan Burgess (30 Jan 2021)

RedOnion said:


> How many of us know, or have known, elderly people rattling around large houses, but won't turn on the heating because either they can't afford it, or want to have something to leave after them for their children? Or can't afford upgrades to their homes that would make their life more more comfortable? In the absence of being able to downsize within the community you want to live in, these can provide a very real service.



If I get invited back onto Liveline , I will ask them to invite you as well, Red.  That is a great "human" description of it.


----------



## RedOnion (30 Jan 2021)

Brendan Burgess said:


> If I get invited back onto Liveline


Some researcher will surely be fired if you ever make it back on!


----------



## Bronte (30 Jan 2021)

RedOnion said:


> Some researcher will surely be fired if you ever make it back on!



If you don't mind my saying so you're incorrect on that. Joe and his team would have been delighted with Burgess being on.  He ramped it up perfectly for Joe, all the blood pressure stuff, I thought Joe was going to explode before BB !!  BB was exactly what Joe wanted to ramp things up.  He's a master at it.


----------



## NoRegretsCoyote (30 Jan 2021)

Bronte said:


> Joe and his team would have been delighted with Burgess being on.


Also allows RTè to claim that they were balanced.


----------



## Bronte (30 Jan 2021)

Brendan Burgess said:


> If I get invited back onto Liveline , I will ask them to invite you as well, Red.  That is a great "human" description of it.


By any chance have you a copy of the contracts. The small print?  The letter of offer.


----------



## Bronte (30 Jan 2021)

Joe constantly made comments to keep the thing going, such as:
- the loans were for the children/Lourdes/ round the world trips
- Interest a killer
- compound interest numerious times, often implying it was rocket science
- ramping up figures, so amount of 204K owed because A Quarter of  Million, which sounds a lot more dramatic
- then there's the sympathy, aha now Ann,  don't say that, with his 'concerned' voice as she says she'd rather be dead
- then there's the pretence at being balanced by mentioning a Bill Tyson Financial guy in the Business Post, that gave Joe a gloss of being knowledgable as he read that out.  
- then he'd put a dig in to the callers with loans for holidays and weddings. Or deposits for the children's houses
- moving on to allow Ann to butt in with the banks are *usurers*, or *bank wants to take the house off you*,


----------



## Bronte (30 Jan 2021)

Bronte said:


> By any chance have you a copy of the contracts. The small print?  The letter of offer.



Someone informed me that you were mentioned over on boards, it's actually quite funny, they seem to like you over there unlike on here LOL.  They also know exactly what Joe Duffy is at. 









						Your line is weak but your point is strong: Liveline from 10th January - Page 293
					

These symptoms are all those I had when I got a foreign strain of e.coli. Long before covid anything. Was quite literally at det's door for a month.




					www.boards.ie


----------



## Brendan Burgess (30 Jan 2021)

Bronte said:


> Two things niggling me, that you can't repay early and that you've to pay future interest if you repay early



Hi Bronte

Great summary. 

She sounded so clear and well informed, but she was talking rubbish.

She did not pay the outstanding interest for the next 12 years.  Why on earth would you do that?  

In fact, come to think of it, she didn't pay a break fee either. 






So her mother sold the house to the daughter and so the Life Loan got paid off without a penalty. 

If she had paid a penalty for early repayment, there would have been no need for the mother to sell it to her. 

I was asked about this two years ago by someone with a Life Loan. I advised the 4 children to buy the mother's house for the outstanding balance on the Life Loan and then there would be no penalty.  Then I discovered that she had passed the 15 year fixed rate term, so there was no penalty anyway as the loan was on a variable rate at that stage. 

Brendan


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## Bronte (30 Jan 2021)

Actually you're right BB, selling is one of the the three triggering events.  So it's not an early repayment and there is no break fee.  As far as I'm concerned Denise got a great deal and her real issue is paying anything at all, that's what it was all about.  It's amazing the mental contortions people go to.  I wonder what the mother actually got for her house.  And if there are siblings who ended up losing 'their' inheritence.

How did you copy paste from the PDF, I couldn't manage it?

Another thing, the brochures clearly state you are to discuss the loans with your children and to make a will etc.  Not that I think people should discuss with their children their own financial business, so I suppose most people just confirmed to the bank that they did discuss it.  Even if they hadn't.


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## Sarenco (30 Jan 2021)

Brendan Burgess said:


> I advised the 4 children to buy the mother's house for the outstanding balance on the Life Loan and then there would be no penalty


Hi Brendan

Life loans (or any other form of consumer mortgage) can ALWAYS be partially or fully paid off ahead of schedule without penalty.

The European Union (Consumer Mortgage Credit Agreements) Regulations 2016 explicitly provides that a consumer has a right to discharge fully or partially his or her obligations under a credit agreement prior to the expiry of that agreement.

In such cases, a lender is entitled to "fair and objective compensation, where justified, for possible costs directly linked to the early repayment, but shall not impose a sanction on the consumer, and any such compensation shall not exceed the financial loss of the creditor." 

In other words, any break fee imposed cannot penalise a borrower.


----------



## Brendan Burgess (30 Jan 2021)

Bronte said:


> How did you copy paste from the PDM, I couldn't manage it?








						Key Post - How to put an image in a post
					

First of all you have to find an image.  So if you see an image e.g. on this site.   Right click on the image  Click on Copy Image  This pastes the image into your clipboard  Then in the post on askaboutmoney, right click in the place where you want to put the image and click paste



					www.askaboutmoney.com


----------



## Bronte (30 Jan 2021)

Sarenco said:


> Hi Brendan
> 
> Life loans (or any other form of consumer mortgage) can ALWAYS be partially or fully paid off ahead of schedule without penalty.
> 
> ...


Here's the break fee. (and I've learnt a new skill today tee hee)


----------



## Brendan Burgess (30 Jan 2021)

Sarenco said:


> In other words, any break fee imposed cannot penalise a borrower.



Hi Sarenco 

I use  the word "penalty" loosely.   I mean a break fee. 

Brendan


----------



## Brendan Burgess (30 Jan 2021)

Bronte said:


> the brochers clearly state you are to discuss the loans with you children and to make a will etc.



That is why I sent the brochure to the programme. 

A person has a right to borrow money without discussing it with their children. 

But BoI recommends to them that they do. 

The Bank can't go any further.  Imagine the furor if a lender sought a statement from each of the children to say that they did not object to their parents borrowing money.

Brendan


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## Bronte (30 Jan 2021)

Brendan Burgess said:


> That is why I sent the brochure to the programme.
> 
> A person has a right to borrow money without discussing it with their children.
> 
> ...



I'd say the bank would love that. But I see the Law Society said no way. Which is entirely correct.


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## Sarenco (30 Jan 2021)

Brendan Burgess said:


> I use the word "penalty" loosely. I mean a break fee.


Understood Brendan but a lot of people think of break costs as a penalty which leads them to make incorrect financial decisions.


----------



## Bronte (30 Jan 2021)

*Case Study - Mags*

Because we bailed out banks, outrageous, surely bank has enough money made off people ....

*Case Study - John*

Ye don't want to know, total gibberish

*Case Study - Deirdre*

Mother borrowed 30K.  Money used to do some jobs on the house.   Now deceased.   They paid it off 70K,  5 years ago when she died, with Deirdre's husband pension. Which was 15 years later.  And if it had been a week later the bank would have taken the entire house worth 300K.  I don't understand any of this.  Entire pension was used. Corporation House, father dead a few years before.  So I suppose they got the house for free.


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## RedOnion (30 Jan 2021)

Bronte said:


> And if it had been a week later the bank would have taken the entire house worth 300K. I don't understand any of this.


She obviously had a completely different loan product to the other 3,000+ customers...


----------



## Brendan Burgess (30 Jan 2021)

Sarenco said:


> a lot of people think of break costs as a penalty



That is a really good point and I will stress it in future.  

Brendan


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## odyssey06 (30 Jan 2021)

Bronte said:


> *Case Study - Deirdre*
> Mother borrowed 30K.  Money used to do some jobs on the house.   Now deceased.   They paid it off 70K,  5 years ago, with Deirdre's husband pension. And if it had been a week later the bank would have taken the entire house worth 300K.  I don't understand any of this.  Entire pension was used.



Could "taken the house" mean "compelled to sell"... 
I sensed a lot of weasel words on the programme... leaving out the 230k they were still left with after discharging the debts.


----------



## Brendan Burgess (30 Jan 2021)

Bronte said:


> *Case Study - Deirdre*
> 
> Mother borrowed 30K. Money used to do some jobs on the house. Now deceased. They paid it off 70K, 5 years ago, with Deirdre's husband pension. And if it had been a week later the bank would have taken the entire house worth 300K. I don't understand any of this. Entire pension was used.



Complete nonsense.  It's hard to know whether she was out and out lying or whether she misunderstood the bank official or the bank official misunderstood the issue.

If the Executor does not take steps to repay the loan, the bank has to take legal action to recover the money. That is probably what happened here.


----------



## Bronte (31 Jan 2021)

Brendan Burgess said:


> Complete nonsense.  It's hard to know whether she was out and out lying or whether she misunderstood the bank official or the bank official misunderstood the issue.



I know it was nonsense but it’s left hanging in the air confirming to the audience that the banks are out to get you. In the middle of it is the ad breaks, with one for this type of product.  And you can be sure after Joe discussed that there is a new loan product Spry will be inundated with people clamouring for loans on Monday. And we’ll all be here in 2036 hearing how all de oulde people were hoodwinked by the big bad banks. Though maybe we’ll be dead by then.





__





						Home - Seniors Money
					






					www.seniorsmoney.ie
				




I’m considering getting my DH  to apply for a loan and we can go cruise hopping till the end of our days. Telling the kids nothing and letting them get on to Joe when we’ve popped our clogs. Leper’s made me think a 3.5k coffee machine is better for my DH than the instant coffee he drinks, and I wouldn’t mind a mink coat.


----------



## Brendan Burgess (31 Jan 2021)

Leper's point that I need media training is so good that it deserves a separate thread. 





__





						Anyone going on Joe Duffy should get media training as they will be devoured by media savvy Joe
					

I listened to yesterday's show on the radio player:- Liveline (rte.ie)  I should point out that on another thread on this forum I compared "Life Loans" to giving sweets to a child and for the record I am against such loans. The following is my opinion of what happened on the show:-  1. Siobhán...



					askaboutmoney.com


----------



## Sophrosyne (31 Jan 2021)

The Law Society had reservations about these loans in 2001.

This explains why


----------



## Brendan Burgess (31 Jan 2021)

Hi Sop

That is interesting. But it's only technical stuff about the fact that BoI insist that a will be made and that they be notified who the executor is - all of which is a good idea anyway.

There was no substantial objection to the product.

Brendan


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## Brendan Burgess (31 Jan 2021)

Later on they have some nonsense that the fixed rates are higher than the rates on ordinary fixed rate mortgages and that there should be no early repayment fee.

They really hadn't a clue.

_(a) The bank does not need to charge the redemption fee because it is getting back the entire capital sum earlier than expected and it can re-lend that sum at a higher interest rate to someone else, or at the same fixed interest rate to someone else, which means that the bank is not incurring an actual loss at all.

(b) The second point is that if the rate is fixed on the basis of average life expectancy, the bank does not, so far as the committee is aware, decline to charge a redemption fee if the borrower lives beyond that average age on which the interest rate is based.

...

It is the further view of the committee that charging a higher fixed interest rate for lifetime mortgages than for other fixed rate mortgages available in the general mortgage market, is in effect a treble charge on a lifetime borrower._


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## Bronte (31 Jan 2021)

odyssey06 said:


> Could "taken the house" mean "compelled to sell"...
> I sensed a lot of weasel words on the programme... leaving out the 230k they were still left with after discharging the debts.



It gets better, about Deirdre, and this bit drove my brother mad, the house was a corporation house, so presumably they got it for free.  (I've edited my case study)  And yes her husband might have used up his 70K pension, but they ended up with 230K.  Plus of course the dad had the use of the borrowed 30K.  Real cost was therefore 40K in interest.


----------



## Sophrosyne (31 Jan 2021)

While the Law Society did not object to the product, it didn’t endorse it either. That is clear from the Introduction.

Besides concerns about certain terms in the contract, it also in the final paragraph of section 9 questioned the appropriateness of the redemption fee:

“While the bank may be permitted to charge such a redemption fee by virtue of Section 121 of the Consumer Credit Act 1995, consideration should be given as to whether such a charge is appropriate in the context of this particular kind of mortgage where the concept of being “customer focussed” could conceivably take precedence over the desire to maximise profits which, it is appreciated, is of some importance to the bank who will argue that it is to compensate them for having a fixed rate of interest, etc.”


----------



## Bronte (31 Jan 2021)

*Case Study Francis - with Senior Fund* - this one is a bit different

- it was a vulture fund
- loan taken out in 2007, 45K, now 90K 8% father had suffered a brain injury a few years before
- case is with ombudsman
- house was valued at 300K and apparently the houses are worth 160K
- father had no house insurance, so SF took out house insurance, added that to loan, and compounded it
- wife died 4 months before he applied for loan, pestered to take out loan, declined 4 times and took it out on 5th time
- Execution only - means they don't have to explain the product to you, didn't understand this

*Case study - Martina*

- FIL, borrowed 112K in 2007 when properties were valued a lot higher
- Died 2020 owed 285K which is just below the amount of the loan
- two adult children devestated and agrieved.  There is no inheritence, FIL would not have taken out loan if he thought his kids would not inherit  
- nobody discussed it, it's a disgrace, compound interest

*Case study - Elaine*

- mother and father borrowed 61K, value 300K in 2005 to do house repairs, now owe 157K
- mother has dementia, at home needs Fair Deal
- Fair deal do not take the loan into account when valuing the house, nor in calculating an assessment of how much you will pay
- house worth 300K or 400K, but it's only worth 100K to family due to life loan.  
- Fair deal will take the loan into account if they can provide receipts as regards the work, she said who has receipts from 2005

*Observations*

Fair deal I'm not au fait with. But apparently they won't be eligible, it costs 2K a week said Joe, so they will have to pay I suppose, but what happens if there is only the state pension for the dad.  My late aunt had no asset and no money and the HSE paid for a lovely care home.  Is that not what happens?  So sometimes it's worth owning nothing.  

*Problem*
That loan will never be repaid until Dad dies, as there is no money there.  Very difficult situation to be in.


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## Brendan Burgess (31 Jan 2021)

Bronte said:


> *Case Study Francis - with Senior Fund* - this one is a bit different
> 
> - it was a vulture fund
> - loan taken out in 2007, 45K, now 90K 8% father had suffered a brain injury a few years before
> ...



That made no sense at all.
It was Seniors Money who are not a Vulture Fund. 

They had a variable rate product.  

45k to €90k in 13 years is only 5.5% which was not bad for 2007.
For comparison, the ECB rate was 4% and the permanent tsb mortgage rate was 5.44%

The house insurance is absolutely standard. If someone doesn't pay their house insurance, the lender could lose their entire investment, so they have a right to insure the house.  This can be avoided by the person not cancelling their insurance.

Don't understand the pestered bit.

If I buy shares through a stockbroker , I can can be a full service client where they will give me advice, or an execution-only client, where I tell them I want to buy 100 shares in Paddy Power and they just do it.

I had not heard of it in relation to mortgages.  But mortgage lenders generally regard themselves as providers of a product and not advisors.

Brendan


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## Bronte (31 Jan 2021)

Brendan Burgess said:


> Later on they have some nonsense that the fixed rates are higher than the rates on ordinary fixed rate mortgages and that there should be no early repayment fee.
> 
> They really hadn't a clue.
> 
> ...



What amazed me is what business is it of the Law Society to talk about interest rates.  That's bank business. Also I suspect the fact the banks had set a fee with solicitors probably irked them.  The Law Society in Ireland doesn't want the banks encroaching on their business.


----------



## Bronte (31 Jan 2021)

Sophrosyne said:


> While the Law Society did not object to the product, it didn’t endorse it either. That is clear from the Introduction.
> 
> Besides concerns about certain terms in the contract, it also in the final paragraph of section 9 questioned the appropriateness of the redemption fee:
> 
> “While the bank may be permitted to charge such a redemption fee by virtue of Section 121 of the Consumer Credit Act 1995, consideration should be given as to whether such a charge is appropriate in the context of this particular kind of mortgage where the concept of being “customer focussed” could conceivably take precedence over the desire to maximise profits which, it is appreciated, is of some importance to the bank who will argue that it is to compensate them for having a fixed rate of interest, etc.”


How is this the business of the Law Society.  And being vague about it, the redemption fee. Either it's legal or it's not.


----------



## Duke of Marmalade (31 Jan 2021)

Bronte said:


> How is this the business of the Law Society.  And being vague about it, the redemption fee. Either it's legal or it's not.


It is absolutely awful stuff from the Law Society.  Way out of their depths on the financial workings of the banking system.*


			
				Law Society said:
			
		

> It is the view of the committee that charging an early redemption fee on a lifetime loan on top of the fact that the fixed rate is set at a higher rate than a variable rate mortgage to take account of the fact that the interest rate is fixed, is in effect a double charge.


The main driver of bank interest rate policy is the interbank market - at what rate can they borrow?  A loan from the bank to a customer is funded by the bank borrowing in the interbank market.  It is the interbank market which sets the rates (of course, the bank adds on a margin for expenses and profit).  Fixed rates can be lower than variable rate as they are now. An early redemption leaves the bank holding the baby of its funding and if this is higher than current interbank rates the bank faces a real loss - this is not double charging.  And the Law Society document is riddled with similar populist nonsense.  Surely the BoI could have sued the Law Society - though come to think of it that wouldn't work, would it?
_* For avoidance of doubt I have no axe to grind for the BoI_


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## Gordon Gekko (31 Jan 2021)

I remain convinced that the Seniors Money/Spry proposition is a great product.

It’s like an “interest only” mortgage, only with far greater flexibility.

Yes, the person can simply choose not to make further repayments, and at 5.5% it will compound over time.

BUT, you can make up to four repayments a year, with a €500 minimum, and up to 10% of the original loan amount each year.

Let’s say the OAP needs €50,000 to upgrade their home. Surely all of these adult children who lose their minds and call Liveline can, together with their parents, rustle up €229 a month to keep the €50k at €50k?

Credit Union or bank loans for that sort of thing attract rates of 8-10% and you HAVE to make capital repayments. The Seniors Money stuff is ridiculously flexible.


----------



## Brendan Burgess (31 Jan 2021)

Gordon Gekko said:


> Let’s say the OAP needs €50,000 to upgrade their home. Surely all of these adult children who lose their minds and call Liveline can, together with their parents, rustle up €229 a month to keep the €50k at €50k?
> 
> Credit Union or bank loans for that sort of thing attract rates of 8-10% and you HAVE to make capital repayments. The Seniors Money stuff is ridiculously flexible.



Gordon

That is great. I completely missed that. 

We love the Credit Unions. But we hate "vulture funds" like Seniors Money so we are prepared to pay a much higher rate to the Credit Union.

Brendan


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## Bronte (1 Feb 2021)

Duke of Marmalade said:


> It is absolutely awful stuff from the Law Society.  Way out of their depths on the financial workings of the banking system.*
> The main driver of bank interest rate policy is the interbank market - at what rate can they borrow?  A loan from the bank to a customer is funded by the bank borrowing in the interbank market.  It is the interbank market which sets the rates (of course, the bank adds on a margin for expenses and profit).  Fixed rates can be lower than variable rate as they are now. An early redemption leaves the bank holding the baby of its funding and if this is higher than current interbank rates the bank faces a real loss - this is not double charging.  And the Law Society document is riddled with similar populist nonsense.  Surely the BoI could have sued the Law Society - though come to think of it that wouldn't work, would it?
> _* For avoidance of doubt I have no axe to grind for the BoI_


Totally agree with you.  I suspect the bank which gave out loans at the height of the Celtic Tiger got burnt on some of these loans as the valuations were way high then and subsequently went way down.  Those kind of things have to be factored into their interest rate.  The rate isn't picked out of the air, they will have had acturies doing calculations on the risk.  They will also calculate how long until people die.  Some people will take issue with my mentioning this but it's a reality of these things so we should be able to state it.  There's less risk when you do an ordinary mortgage which seems to be lost in the discussion, younger people take out ordinary mortages, they will live to pay back their mortgages and every year the risk gets smaller for the bank as the asset is increasing in value and the mortage is deceasing. 

Because of this thread I checked out interest rates. Personal loans are in the 8% to 9%. Credit unions are charging 12%.  Nobody has told us what 65 year olds who need to do house repairs are supposed to do. 

I'd  but I'm not sure, that some people in their sixties thought to themselves why not borrow and have a bit of fun (travel/cruise/party) or just to have a nice new car, put in better heating, supplement their retirement.   But they won't admit it to their children.  Much better to blame the bad bank.


----------



## Bronte (1 Feb 2021)

Joe Thursday 28th Jan
- Said that if you won the lotto and paid down your loan early, after 5 years, you would still have to pay 15 years interest
-  He read the RTE news website about Spry Finance (giving Spry great advertising)









						Lifetime Loan provider re-opens to new applicants
					

Lifetime Loan provider, Spry Finance, the new retail division of Seniors Money Mortgages DAC, is re-opening to new applicants.




					www.rte.ie
				




- Read out a statement from Spry CEO Derrick Hanly
- wondered if there is a warning about the Fair deal in their warnings  There is, see below
- then later mentions small print, then says there are 5 different warnings and does this not mean there is a problem ... the fact you have to pu in 5 separae warnings, say's there is no small print anymore as you can blow it up.  (it is in big capital warning boxes)  

WARNING: PURCHASING THIS PRODUCT MAY NEGATIVELY IMPACT ON YOUR ABILITY TO FUND FUTURE NEEDS.


----------



## Bronte (1 Feb 2021)

*Case Study – Siobhan*

Uncle in hospital, took out loan in 2004 100K
Aunt in home, now ow 261K, 6% went to 3% after 10 years
It will only end when both are dead
Trying to sort out fair deal, discovered the bank had the House Deeds
Feels bank traded on their good name, bank hoodwinking people
Wondered why they stopped the Life Loans in 2010 because that’s when the bank had accrued all the money
A wits end, the tracker people got compensation, feels the show means that people will get recompense, it’s all the old and dying people, bank sweeping it under the carpet
*Observation*

Not sure what there is to worry about, her uncle will be taken care of by the state at the end of the day and it will paid for by the taxpayers.

*Case Study - Bill*

- mother 85 told Bill to drive her to the bank, borrowed 80K. Passed away in March at age 101, fully with it, now owe 200K
- came out with an envelope of money and gave it to him, and said this one is for you and there's the same for your brothers
- she said she was giving him the money while she was alive not when she was dead
- she explained how she got it, he looked at the money and said wow that will help out in paying off my debts when he was looking at the money, thinking that was that was really going to help out
- sold house, had to because they couldn't afford it, after legal fees, little left over
- getting a tiny amount now from estate
- People go into banks owing millions and have the debt wiped off, and what's the difference between them and him,  wants banks to look into each individual case, you're struggling and the, the bank/these people,  and decide not to , plus 'we' own the banks, 'we' bailed them out, the bankers in their big offices, an 85 year old woman doesn't read small print, the banker in the pin stripe suit,  all his mother couldn't wait to get into the car and give him the money. The look on her face, and the look on his face when he got the money.
-  Was persuaded by beautiful girl on Joe's team to go on the show, came on because of the woman who wanted to die about her debt
- Why isn't there a legal representative beside his mother (I don't undestand how she got a cheque directly, did it no have to come via a solicitor?)
- his mother didn't expect to live to 101, so she thought I'm giving a few bob at age 85 and so she thought she'd have another few bob when she died 

There was confusion initially about cash in the envelope it was actually a cheque. Which means Bill had to go and get it cashed.

*Siobhan* - people don't question banks, shame on you BofI.  Can't believe it was legititimate, that the regulations were changed because they realised they were doing wrong. Penal interest, it's immoral, criminal charges the interest, thanks Joe.    * Joe-* they are not St. VdeP.


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## Brendan Burgess (1 Feb 2021)

I have moved the disucssion on covenants here: 





__





						Using a covenant to make the repayments on a Life Loan
					

Let’s say the OAP needs €50,000 to upgrade their home. Surely all of these adult children who lose their minds and call Liveline can, together with their parents, rustle up €229 a month to keep the €50k at €50k?  Thinking about this (a dangerous practice!).  If the parents needed a lump sum now...



					askaboutmoney.com


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## Bronte (1 Feb 2021)

*T**om Murray - Financial Independant Advisor** Fair Deal Leading Advisors*

- Joe says the warnings don't mention the loan might affect the Fair Deal
- Tom says they do,  comes across implications on far too regular basis, upset the products are back, one ad said they already had 30K clients, but that's gone now (due to Liveline they believe).
- In 2021 you are asked if you've taken legal/financial advice, but it was different in 2000
- Joe says why should you need to have a relative with you
- HSE do not recognise Life Loans, unlike normal mortgage, so a disaster as regards Fair Deal
- two issues, clause prohibiting 'additional charge' on property, but if bank doesn't agree,  you can't get the 721 Euro per week, from Fair deal.  36K a year.
- Thinks the central bank regulator should ban them
- thinks the forms in 2000 didn't have clauses about financial advice and legal advice
- says many people who took loans out didn't expect to live so long, many were bright people.


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## Bronte (1 Feb 2021)

*Brendan Burgess - from Ask about Money*

- Joe says BB thinks the loans are the best thing since sliced bread
- his blood pressure
- outrageous that people can go on and make outragous
- David,  BB geting really annoyed he said, mentions it was Pounds not Euro's, it was not 25K but 32K, in 2001 paid off loan in 12 years, looks at his notes and says it's 14 years, David went to bank with her,  David was on Liveline in 2016.  Every one of the Listeners did not take out the loan without legal advice,  2004 brochure sent to show.  Dispute about figures.  Siobhan said it was Euro's in 2004.  Joe plamasing BB.  And stops him speaking and distracts BB.
- Brochure is crystal clear, you can repay a Life Loan at any time, as with any fixed interest rate, early repayment penalty, says did not have to pay interest for 15 years, the caller yesterday was wrong.  Very good product.
- Joe asks would BB mention fair deal. BB says 'probably' he would.
- Fair Deal, high blood pressure, Bill, says at 85 what vitality do you have, mentions BB's blood pressure (this is mad stuff).  BB says he is 63.
- BB says Spry mentions the Fair Deal.  If there is a problem with Fair Deal take that up with them.
- Siobhan says the Fair Deal is a loan on your house, BB, trying to calculate, tells her she can go in and pay off loan, says there is no penalty, she says it's fixed at 3%
- BB If you don't own your house than you can't use it as security.

*David Hall*

- Joe says BB thinks it's a great country
- it's a strange country where Burgess has to come on for the banks (first dig at BB there)
- says you should get advice, should get enduring power of attorney, let family know about loan
- Predatory product, the most intelligent articulate person, when they become vulnerable, you need effective regulation, you can *waive *legal advice (?) very little regulation on this,  at the time, this is a main stream bank, now very profitable, supported by state and the people, they have contol, they can change the interest rate, a halt can be put to this, the Minister for Finance, the Department of Finance. Central Bank and Director of Consumer Protection,
- The five warnings says it all, and BB is right, you should get independant financial advisor.
- mentions austirity taxes, UPC, money pumped into banks and state
BB
- page full of warnings if a 25 year old get a normal mortgage, the brochure on this product has 5 warnings,  this doesn't mean much, brochure is basically perfect, an independant advisor migh advise you not to take the loan, might advise you to sell your house and tade down

- Joe says Tom Murray says they should be banned, Hall says they are a despicable predatory product,  there are much cheaper options to borrow money (? no examples) predatory product, vulnerablity, nakedness,  embarrassed to ask for money, his Client (widow) borrowed money to pay for her daughters wedding,  6% in a bank that we pumped money into, how much the people have paid in taxes during the austerity after the crash....

Joe says he'd come back to BB after ad break.  Goes to James, afer rabbitting on for ages


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## Bronte (1 Feb 2021)

*Case Study - James*

- Mother borrowed 75K, paid back 191K in 2020, now with dementia in care home
- needed to do a bit of work on the house and to travel, James not in a position to help her at the time
- Had to deal with Fair Deal and sort out Enduring Power of Attorney
- Product is the greatest form of Elderly abuse that ever existed, his mother did definitely need the money, but the amount owing is criminal
-
BB - she had the loan for 14 years

James says it was astronomical, (BB says it was not)  money served it's purpose, they tried to pay it back but it was out of their reach, says they could not pay back part, dispute with BB, who is surprised you can't repay part, new product you can.  James says it's an old loan and you can't. That is what he was told.

BB compares it to renting a car over 14 years. If you don't make any repayments it will be a high cost. (bad example)  He's trying to make the point i you pay zero back over such a long time of course you'll ow loads, but that fell on deaf ears, James laughed and said you'd buy the car.

James said they had to sell house to repay loan.  Not able to get Fair deal.  Can't get Fair Deal when the house is sold.  And she has no Fair Deal.

BB reads from brochure of 2004 which says you can repay part. James then changes and says they weren't in a position to repay part.  And says he wasn't in Finance and didn't undestand that.

Joe asks about the interest rate, BB says it's too high because of Liveline.  Everybody thinks this is hilarious.  Joe plays to this audience.  (he's really good at that)

BB says if


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## Brendan Burgess (1 Feb 2021)

Bronte

They are great reports. I am reliving the programme as I read them.

Brendan


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## Bronte (1 Feb 2021)

Brendan Burgess said:


> Bronte
> 
> They are great reports. I am reliving the programme as I read them.
> 
> Brendan



Tiz mad stuff. But it's giving me a right good laugh on a wintry day.  You might not like my conclusions !!


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## Brendan Burgess (1 Feb 2021)

Bronte said:


> You might not like my conclusions !!



It must be obvious from my appearance on Liveline that I hate any criticism or anything other than unconditional agreement with and admiration of me and my opinions. 

Brendan


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## Bronte (1 Feb 2021)

*Tom Brannigan - Retired Banker - this bit is totally bonkers*

- came on because of people on the show who signed an agreement but didn't realise what they were signing, didn't understand
- offer letter says to seek legal advice.
- (BB says it's a form of mortgage and you had to take legal advice/solicitor.)
- Tom says if a solicitor tells the borrower it's in your interest to take out the loan than the solicitor should look to his ethical standards
- Joe says it was not sold as a mortgage, dispute over obligatory legal advice
- Tom says legal advice was not obligatory (contradicting himself as regards the offer letter)
- BB says it's a formal mortgage document, secured on your home,  must have a solicitor, money goes to the solicitor to pass it on to the borrower, same legal process as getting a mortgage.  Confusion then over financial advice.  (which can be waived but it's lost in the chaos)  BB says it's the same legal process and Joe says 'but you're not buying a house'.
- James interjects about compound interest, BB says all mortgages are compound interest, all loans are compound interest (OMG)
- Joe says all loans are not 5.5%
- BB mentions Ann paid 15% on her mortgage, that long term fixed mortgage rates are more expensive, Joe says in 2000 mortgage raates weren't 17%, asks Hall about legal advice
- Hall says loans were sold onto third parties, despicable,  we pumped billions into banks, no return for vulnerable people, Central Banks needs to stop this, Joe says CB approved this product, Hall says the CB agreed it over a game of Golf (OMG)
- Joe says that the fact your solicitor pays the cheque to you is no proof of legal advice (we have arrived in Mars folks)
- BB explains to Joe the contract goes to your solicitor, and he doesn't say to the client you know what you're signing so I'm not going to bother reading it,  instead he says do you understand that you are giving the security of your home to the Bank and in 15 years time....   Joe says then nobody would have taken out a loan because solicitors, especially as they don't  don't discuss it with them over a game of golf.  Ramps it up by basically insinuating all the borowers were so stupid they hadn't a clue what they were signing because they wanted the money  fo a trip to Australia and they were so stupid they didn't see it as a mortgage.  In response to Tom trying his best to say taking out a mortgage is a serious matter.


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## SGWidow (1 Feb 2021)

In fairness, Bronte - that last post is very funny - thank you!

Brannigan truly was a beauty. You can kind of rationalise where everyone else was coming from but that lad seemed happy just to be on the wireless. After that, I had the sense that the meaning and order of words were as much a surprise to him as the listener.


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## Bronte (1 Feb 2021)

*Case Study James Smith *

- Partners mother borrowed 12K in 2002, died in 2012, 43K owed
- Tried to make a payment plan with bank, house had to be sold, brother with mental health issues had to move out
- Says Burgess is wrong about Part payment (I think James misunderstand
- BB says figures could not get to 43K over 10 years.  

David Hall
-  vulnerability, people need money, says you can waive legal advice.  Except if you are geting a mortgage. Joe says it wasn't seen as a mortgage. 

*Case Study Ciara*
45K borrowed, 137K owed, father in hospital,  mother stressed about money owing to bank, Ciarra knew the day before they applied for the loan.  House went below the amount owing and they were stressed about this. Needed help from CC for adapted bathroom.  House sold.  45K is an awful lot for a bathroom.  I'm guessing they also received money from the CC as why else did she mention them.  Bank Morals.....  House sold to pay off loan.


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## Brendan Burgess (1 Feb 2021)

Bronte said:


> House sold to pay off loan.



Under the Life Loan schemes with BoI and Seniors Money , the borrower never had to worry about selling the house if they were still living in it.

They had to repay the loan, only if they vacated the house.

Brendan


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## Bronte (1 Feb 2021)

Brendan Burgess said:


> Under the Life Loan schemes with BoI and Seniors Money , the borrower never had to worry about selling the house if they were still living in it.
> 
> They had to repay the loan, only if they vacated the house.
> 
> Brendan


The thing that gets me is that the people who borrowed the money were going to be fine anyway.  They clearly knew exactly why they were borrowing and the figures were clear as day. A 12 year old could understand the brochure.  But it's an easy way to explain away their actions by saying it was the banks fault.  Not one person on Joe, particularly David Hall, said what product people in their sixties needing renovations could access.  Nobody mentioned that if people are stupid enough to borrow money to go on cruises it's not going to end well.  Nodody said what interest rate would have been acceptable.  We already know 6% wasn't really that high.  A credit untion personal loan is 12%. Overdrafts and credit card interest rates are high.
Not one poster on here has been able to come up with a different solution for older people.  There is no such thing as free money.

One thing I do know is needed, compound interest needs to be made compulsory in schools.  The fact you had to tell James that all mortgages are compound interest sums it up the level of ignorance. And I wouldn't mind but he sounded educated.

My grandparents lived in a large old house, it needed massive renovation, they couldn't make it up the stairs to their bathroom and had an outside toilet.  I stayed there for a time.  The kitchen was a disgrace.  A loan like one of these would have made a massive difference to their quality of life. Their adult children, my parent included, could have done something about it but never did. I know my grandmother was giving two of her adult children money when they visited. A tenner or 20 here or there.  When they both passed away my aunt went digging the back garden to try and find money. And who got the house, the adult children who had not lifted a finger to help them live better.  Those grandparents scrimped and saved all their lives to give their children a better future.  Most genorous people you could ever meet.  They didn't even realise their living situation was abysmal but I remember my grandfather using a plastic paint bucket to take out urine to the outside toilet from the bedroom as they didn't want to go outside at night. He was embarressed when I realised what it was.


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