# Bank of Ireland's Life Loan on Joe Duffy



## Brendan Burgess (14 Jan 2016)

I was alerted to this item yesterday 

http://www.rte.ie/radio1/liveline/p...ine-wednesday-13-january-2016/?clipid=2074820 

So I emailed them to set the record straight and I did a short piece today.

http://www.rte.ie/radio1/liveline/ 

scroll down to Life Loans


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## Delboy (14 Jan 2016)

Was listening to it today. Some folk don't seem happy to see the inheritance disappearing


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## so-crates (15 Jan 2016)

Certainly there are plenty of people out there who really, really don't understand what "compound interest" means. There is a an issue with people's financial literacy. She says "I understand compound interest" but the fact she is shocked the loan amount, where there have been no principal repayments, doubled in ten years means that she genuinely didn't understand it. It would have been interesting to find out what she thought it should be? 

The break out clause seems a bit of a kick in the teeth though.


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## Bronte (15 Jan 2016)

I heard both reports.  In both cases the elderly adult were fully informed of what they were signing up for.  Not only that in Orla's case they actively went looking for the money.  Because I listen to these stories with a cocked ear and because of my experience on here I take notes to try and figure out the facts

*Orla's mother.*

Background

She was 80 in 2005 and needed money to pay off the father to leave the house as there was a problem between them.  They got 165K at 6.5 % compound interest. There was no other option to get the money other than BofI.  The mother was fully with it and Orla was involved in helping her get the loan.  They knew what they were signing up for.  This product was particularly suitable because there were no repayments.  So it would seem to me they were grateful to get the loan.

Today 2015

Orla is now livid with the bank, because she feels that the repaymount amount at 300K is too high. Her logic on this is that because interest rates were so low then ergo she's paying too high a rate, an *incredible* rate.  Even though that is what they signed for.  She wants to pay, but not that amount.  It's not *fair*.  She also doesn't understand why the bank won't *negotiate* a reasonable rate now.  That paying 100% interest is not fair.  (ie doubling of original amount borrowed, she was ignoring the compound interst to suit her argument). She also is upset with the *inflexibility* of the bank and doesn't understand why older people were charged so much.

Questions

1. Was the interest rate fair.
2. Was everything done above board
3. Was everybody aware of what they were signing up for
4. Did they understand compound interest

My opinion to those questions is yes.

Inheritence

On day 2 Orla was asked by Burgess did she need the money for the care of her mother who now lives with her, one would get the impression from her reply that she did, but the previous day she stated that her mother was upset, distraught, at the fact that her grandchildren's inheritence is gone

Bank

Why was the interest rate 6.5%.  Well it's not a mortgage, they are getting zero repayments, they take the risk of property going down, because if the mother lived long enough or property tanked, the only amount they could ever get was the value of the property.  So that risk is factored into 6.5%.


18K Breakout clause

If the loan is repaid before the borrower dies there is an 18K penalty.  I presume this is to cover the bank in the situation of a quick repayment, they need a few years go go by to be making money on the loan.  It is not uncommon a clause in any loan product.  Also there is no penalty if the mother went into a care home (someone might clarify this is what she said)  Now that the mother is living with the daugher I would argue this 18K should be waived by the bank because it's equivelent to going into a care home.

Note: Bronte hates banks, but I try to be fair. Do I think banks are unscrupulous.  Absolutely.  Do banks mis sell. Absolutely.  Will bank staff do anything for commissions. Absolutely.  None of those applied to the first two cases were heard on RTE radio.  The third case was different and it was also a different product.


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## Bronte (15 Jan 2016)

so-crates said:


> Certainly there are plenty of people out there who really, really don't understand what "compound interest" means. There is a an issue with people's financial literacy. She says "I understand compound interest" but the fact she is shocked the loan amount, where there have been no principal repayments, doubled in ten years means that she genuinely didn't understand it. It would have been interesting to find out what she thought it should be?
> 
> .



But there is no difference to this loan than any of the mortgages any of us have had, they are all compound interest so depending on our interest rate we could easily pay double the amount borrowed or more.  When I started off mortgages were around 17% with Irish life.  I can remember fixing at over 9% myself at one stage.  Even today I'm paying over 4% on one mortgage.  In this case there were no repayments, so the hit is you have to suddently pay a large lump sum, but you knew that when you signed up for the loan.


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## Brendan Burgess (15 Jan 2016)

Bronte said:


> 18K Breakout clause
> 
> If the loan is repaid before the borrower dies there is an 18K penalty.



Hi Bronte

Great summary. 

I spoke afterwards to Greg Allen the guy who designed the product for Bank of Ireland back in 2001. He hasn't worked there for some years.  It is very clear. There is no early repayment penalty if the house is sold for any reason. 

So either 
1) We misunderstood Orla
2) Orla hasn't understood the contract properly. 
3) Orla wants to pay off the loan early and keep the house. 

A break out fee is normal in a fixed rate mortgage.  If there were no fee, then when interest rates rise, people who fixed would get all the benefits. But when interest rates fall, they could break out of their fixed rate deal and avail of lower rates. 

I am not 100% certain, but from memory, the BoI documentation had a table showing how much the balance would be every year for 15 years. 

Brendan


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## Bronte (15 Jan 2016)

She mentioned that they were going to left with very little.  But they got 165K to use meanwhile which she misses, yes it apparently went to the dad but they got it all the same, and they couldn't get it any other way.  If it's worth 400K now and she has to pay 300 or 318 well that's very little but it ignores the 165 originally got 10 years ago and that borrowing money costs money. 

They have to pay an extra 135K interest for having that money for 10 years without paying anything.  They also get whatever equity is in the house.  That too was not clear.  She also said she wanted 'to exit on a reasonable figure' .  I don't understand why she wouldn't tell you how much the house was valued at in 2005, she clearly knew or had a ball park figure because she said it had been valued at an 'inflated rate' at that time.


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## so-crates (15 Jan 2016)

Bronte said:


> But there is no difference to this loan than any of the mortgages any of us have had, they are all compound interest so depending on our interest rate we could easily pay double the amount borrowed or more.  When I started off mortgages were around 17% with Irish life.  I can remember fixing at over 9% myself at one stage.  Even today I'm paying over 4% on one mortgage.  In this case there were no repayments, so the hit is you have to suddenly pay a large lump sum, but you knew that when you signed up for the loan.



I'd still be very curious as to what she thinks is "fair". She went on a great deal about how unfair and unreasonable the bank were and that they were willing to repay but not repay double the amount so I'd like to see what "willing to repay" translates to in real hard cash terms. I think she may have looked at the table outlining the costs when they took out the loan and promptly put the whole thing to the back of her head and thought no more about it. I would hope she understands the concepts behind compound interest but I'd say she never truly absorbed the meaning in "pounds, shilling and pence".



Brendan Burgess said:


> Hi Bronte
> 
> Great summary.
> 
> ...



Certainly from what Orla said I understood that the breakout was because of the house sale while her mother was still alive - it did seem a bit far-fetched but she seemed definite on the matter.


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## Brendan Burgess (15 Jan 2016)

so-crates said:


> Certainly from what Orla said I understood that the breakout was because of the house sale while her mother was still alive - it did seem a bit far-fetched but she seemed definite on the matter.



I listened back to it just now. This is what she actually said: 

"There is a break out clause of €18k because she is living with us. We are trying to sell her house but we can’t at the moment and the bank is telling us that we have to pay this amount.  "

and later

"I should point out that, God forbid, if my mother did pass away, , that we wouldn’t pay the €18k”"

I appreciate fully that people muddle up their words in live interviews.  But this seems particularly misleading.  If they sell the house, they don't pay any early repayment penalty. If they don't sell the house, but want to exit the loan early, they pay an early repayment penalty.

Seems totally reasonable to me.


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## Brendan Burgess (15 Jan 2016)

so-crates said:


> I'd still be very curious as to what she thinks is "fair". She went on a great deal about how unfair and unreasonable the bank were and that they were willing to repay but not repay double the amount so I'd like to see what "willing to repay" translates to in real hard cash terms.



Orla didn't suggest a figure. But David did. "The loan was 25,000 and is now 86,000" "We offered 50,000 in full and final settlement"

An ordinary listener might think that an offer of 50,000 for 25,000 was reasonable. But the 25,000 was IR£25,000 or €32,000 and it was granted in 2001, or between 14 and 15 years ago. His offer amounted to an interest rate of 3% when they signed up to an interest rate of 6.9% fixed. 

Brendan


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## so-crates (15 Jan 2016)

Yes I noted the figure David approached the bank with and the currency confusion. I don't know why but I got the impression Orla's percentage would have been lower. Perhaps because they were starting from a much higher figure. She seemed slightly nonplussed by what David offered.

Her wording was confused - it certainly left me with the impression that the break clause kicked in because of the sale.


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## dub_nerd (15 Jan 2016)

Let's call a spade a spade. These people are total chancers.


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## Black_Adder (15 Jan 2016)

My understanding on Life Loan was:

There is no break fee at all ever ever if the house is sold for any reason.


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## Bronte (15 Jan 2016)

Black_Adder said:


> My understanding on Life Loan was:
> 
> There is no break fee at all ever ever if the house is sold for any reason.



I don't think this was Orla's main gripe.

I was discussing the life loans with my husband yesterday.  And how they could be beneficial to us when we are older.  Say our investments went sour for some reason and we were elderly and living in our home worth a few bob but cash poor, low pension.  Why shouldn't we be able to take out some equity when we are in our seventies to see us to the end.  To pay for a conversion to the house for being old, to pay for better health care or home help, to have extra heating in winter, or to go on a cruise if we so wish.

We are perfectly aware people, we know what compound interest is, we know that with zero repayments the amount owing will go up massively, it's exceedingly difficult when you are not earning any more to get a loan, this type of Life loan can be brillant if needed as long as one understands it and the interest rate or terms aren't too onorous.


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## Black_Adder (15 Jan 2016)

Hi Bronte

I was responding to this:

"There is a break out clause of €18k because she is living with us. We are trying to sell her house but we can’t at the moment and the bank is telling us that we have to pay this amount. "

Just on that point - no break fee if they are selling house.


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## Duke of Marmalade (15 Jan 2016)

I listened to yesterday's show.  Brendan was of course totally right.

Possibly we are emphasising the compound interest effect too much.  In Orla's case only 30K of the 135K interest is in fact due to compounding, I think she would be complaining even if there were no compounding.  The problem here are the optics of the rolled up loan.  For a mortgage even at these low interest rates a person will typically pay back more than twice what was borrowed but one does not hear people retrospectively bemoaning this fact.  If Brendan is correct and BoI actually illustrated the effect of rolling up the loan then it is difficult to see any case at all for the complainants.


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## Brendan Burgess (15 Jan 2016)

Duke of Marmalade said:


> In Orla's case only 30K of the 135K interest is in fact due to compounding,



That is a really good point.  

Brendan


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## so-crates (15 Jan 2016)

Duke of Marmalade said:


> In Orla's case only 30K of the 135K interest is in fact due to compounding


I'd made the same calculation which was why I was wondering what her idea of a "fair" figure would be. I think Joe was remiss not to ask her about that.


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## Duke of Marmalade (16 Jan 2016)

I see this story is front page in today's _Indo_.  Whilst Charlie Weston does not actually state that there is a scandal here I am disappointed that he has let the overall sensationalist tone suggest that there is one.  No smoking gun here, I am afraid, Charlie.


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## so-crates (16 Jan 2016)

"People shocked when chickens come home to roost" doesn't have quite the same effect on newspaper sales as "Avian threat: Winged interlopers invade". it is a terrible article.



> Thousands of elderly people are facing a massive debt time bomb on their homes after taking out equity release products.


By the nature of the product, unless they require a second injection of cash, the elderly people themselves are not facing any debt timebomb. In fact the banks have probably had to accept some losses on these because of the dip in property prices.

He very quickly changes it from the elderly though to "families". I


> But many families are now finding that the amount owed leaves them with nothing when the homes are sold, wiping out inheritances.




At least he seems to have got a fairly clear statement from her on the nature of the breakout clause



> Repaying the loan before her mother dies will trigger a €18,000 "break-out" charge, as the loan is fixed at 6.5pc for 15 years.



Which doesn't seem to be quite in line with Brendan's post above (though I note the "15 years" so I wonder if we are actually getting a true picture).


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## Gordon Gekko (16 Jan 2016)

In my view, the agenda here is being pushed by disgruntled prospective beneficaries of their parents' wills.

Which is more preferable...the more common scenario of elderly parents with loads of assets and low incomes (the wealthiest people in the cemetary)...or a simple product which enables elderly parents to enjoy their latter years and the fruits of their labour?


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## postman pat (16 Jan 2016)

My memory of the adverts for life loans was everyone was smiling in them and stating in them that nothing to be repaid until you die...I think the banks at the time believed that house prices were going to increase year on year and  there was very little risk in them(life loans),It just seems banks took advantage of the situation that some older people were in, maybe it was legal and the rest but does not mean it was right, so in conclusion instead of being a cheerleader for the banks i will be a cheerleader for Orla and her mother and the others affected by this.


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## dub_nerd (17 Jan 2016)

postman pat said:


> My memory of the adverts for life loans was everyone was smiling in them and stating in them that nothing to be repaid until you die...I think the banks at the time believed that house prices were going to increase year on year and  there was very little risk in them(life loans),It just seems banks took advantage of the situation that some older people were in, maybe it was legal and the rest but does not mean it was right, so in conclusion instead of being a cheerleader for the banks i will be a cheerleader for Orla and her mother and the others affected by this.


What are you cheerleading -- that loan repayments should be optional? What is it you're saying is wrong with these products? In what way did the banks misrepresent the product, or otherwise take advantage? In fact, name one thing about these loans that could not be foreseen on the day they were taken out ... which Orla and the other guy said they fully understood?


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## Bronco Lane (17 Jan 2016)

I suppose the family could rent out the house or is there some clause in the agreement that prohibits this? They could then get an income for the mother and wait for their inheritance as the house increases in value.

When the husband was being "paid off" I am sure that there were solicitors involved. What additional advice did they get at the time about this? Did the family not bother to ask?


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## dub_nerd (17 Jan 2016)

Bronco Lane said:


> I suppose the family could rent out the house or is there some clause in the agreement that prohibits this? They could then get an income for the mother and wait for their inheritance as the house increases in value.


Even if allowed, that's only worthwhile if the rental income plus the capital appreciation is better than the interest rate of 6.5%. And bear in mind the rental income is taxable, and so are the capital gains once the house ceases to be a private dwelling house.

But why are we talking about the family "waiting for their inheritance". The house and money belong to the mother. She has the benefit of a large sum of money borrowed ten years ago that she doesn't have to worry about repaying, ever. She could live to be 120 and be laughing all the way to the bank, while the bank sucks up the shortfall when the house is eventually sold. The rest of the family has no automatic right to benefit from the arrangement. *It's not their money!*


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## Gordon Gekko (17 Jan 2016)

There's no capital gains tax on death, so renting it out would be fine...


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## dub_nerd (17 Jan 2016)

On the other hand, 'Orla' said they had difficulty selling it, so may not be very rentable. Or, they are having difficulty achieving a sale price that returns the "inheritance" they want, which means it might also have difficulty achieving a rental return that outpaces the compound interest.


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## SoylentGreen (17 Jan 2016)

dub_nerd said:


> The rest of the family has no automatic right to benefit from the arrangement. *It's not their money!*


We can all take the moral high ground on these issues. As a parent I would like to leave some money to my children and grandchildren. I think most people would. 
I also think that most children would like to inherit something from their parents. When the children begin to have an expectation or an elevated sense of entitlement is where the problems begin.
I think if we see our parents enjoying their life to it's fullest we are happy. Some people might see this in another way. They are squandering our inheritance type of attitude.

One of the above cases has received a lot of coverage in the media. The husband was not shown in a kind light. We don't know the story but he has now been identified because of the media coverage. He received circa €160k or did he? We actually don't know. Maybe he only received a portion of this and if so what happened to the rest of the money?

Was this half the value of the house at the time?  Would the "husband" have been able to purchase a property for himself with his half during the tiger years?

Why has the daughter, after 10 years, decided to raise this issue? Why not after 5 years? Why not after 6 years? Why not after 7 years? Why not after 8 years? Why not after 9 years?  Who paid the utility bills, insurance and maintained the property for the past 10 years? The mother?

What has changed?  The mother has moved in with the daughter? The house still requires the same costs to run. The mother can continue to maintain it as she has done over the past 10 years. Maybe the daughter now sees the cost and what is involved in running this house. Why did she not see this over the past 10 years? 

Or is there something else going on? Maybe.....why am I left to look after mother and deal with the empty house while the other siblings do nothing?  I feel I should be paid for this.......maybe?


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## dub_nerd (17 Jan 2016)

SoylentGreen said:


> We can all take the moral high ground on these issues.


And so we should!



SoylentGreen said:


> As a parent I would like to leave some money to my children and grandchildren. I think most people would.


Well then the best strategy is unarguable -- if you want to maximise your children's inheritance, don't borrow against the equity in your home.

The rest of your questions are, I feel, irrelevant. Why did the money have to be borrowed? Who got the money? Who supported the mother, then and now. What are the expectations on the part of the child? None of those are the concern of the bank. So what is the complainant's legitimate complaint about the bank, if any?


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## Brendan Burgess (17 Jan 2016)

SoylentGreen said:


> Why has the daughter, after 10 years, decided to raise this issue? Why not after 5 years?



This is a very good point.

Why did she not raise it when she got the letter of offer and saw 

The interest rates was 6.5%
It was fixed for 15 years 

The illustration showed that after 10 years, €300k would be outstanding. 
I don't read the Irish Independent and then go back to the shop afterwards telling them that it was too dear and to give me half my money back.

This is what Orla is doing.

Brendan


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## Gordon Gekko (17 Jan 2016)

It's a fantastic point. The answer is that the customer wants a two way bet. If property prices had skyrocketed, we wouldn't hear a peep about this.


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## Brendan Burgess (17 Jan 2016)

Gordon Gekko said:


> The answer is that the customer wants a two way bet. If property prices had skyrocketed,



Or if interest rates had increased


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## mtk (17 Jan 2016)

Absolutely agree
I also recall the borrowers were required to in get independent legal advise.,,,


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## postman pat (17 Jan 2016)

so whats the lesson here?... that the banks are the knights in shining armour coming to the rescue of these poor old people with big houses with greedy offspring??.. by the way are the banks still offering this wonderful service?.
I would think not..


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## Brendan Burgess (18 Jan 2016)

The lesson here is that there are thousands of elderly people living in large mortgage-free houses who would like to continue living in these houses who need money for a variety of reasons - adapting the house to their needs; doing urgent repairs; paying for medical care; etc. 

Those people should prioritise their needs over their children's inheritance.  
Lenders should provide a product which allows those people to borrow the money and roll up the interest. 
The media should not demonise those lenders ten years later when they seek recovery of the money lent and the children want to keep their inheritance intact and hope by lobbying Joe Duffy or Charlie Weston that they can embarrass the bank into giving them some write-off. 

Hopefully the bank will ignore them.


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## Dan Murray (18 Jan 2016)

Just wondering
1. Are these products still available?
2. If somebody has such an arrangement, how would this impact the Fair Deal Scheme?


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## Brendan Burgess (18 Jan 2016)

No, they are no longer available, unfortunately.

Brendan


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## mtk (18 Jan 2016)

Brendan Burgess said:


> No, they are no longer available, unfortunately.






Yes they  met a real need
I remember querying a senior aib guy why didn't offer them - fear that  this ( media rubbish ) might happen !


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## jdwex (18 Jan 2016)

mtk said:


> Yes they  met a real need
> I remember querying a senior aib guy why didn't offer them - fear that  this ( media rubbish ) might happen !




Or the parent dies, and the offspring refuses to move out of the house (possibly with a bit of help from the likes of Jerry Beades  )


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## Dan Murray (18 Jan 2016)

When were such schemes discontinued? Specifically, pre or post the introduction of the Fair Deal Scheme in 2009? What I'm trying to understand is whether it would still be possible for a bank to offer such a scheme now with particular reference as to how such an offering would impact on the Fair Deal Scheme?


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## Brendan Burgess (18 Jan 2016)

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


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## Dan Murray (18 Jan 2016)

Thanks Brendan

So just to clarify

1. Are you saying that if I feel the Fair Deal Scheme might be appropriate for me in say a year's time, if I gift my house to my son now, when I enter the Fair Deal Scheme, the ordinary charge on my house will not apply?

2. If I had taken out a life loan - say as per the original Joe Duffy case - would the home be subject to a "Fair Deal" charge or not, and if yes, how would it be calculated in broad terms?


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## mf1 (18 Jan 2016)

Dan Murray

1. This link below is helpful with your queries

[broken link removed]

This section in particular: 

*"Cash assets* include savings, stocks, shares and securities. *Relevant assets* include all forms of property other than cash assets, for example a person’s principal residence or land. In both cases, the assessment will also look at assets that you have deprived yourself of since applying for State support or in the 5 years before the application."

2. Have you taken out a life loan? If yes, presumably the HSE can take a  charge ranking behind the life loan charge
If not, and you do decide to take out a life loan, if available, and you do need to avail of the Fair Deal Scheme, the use to which you put the funds to will be looked at. 

mf


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## Dan Murray (18 Jan 2016)

Thanks mf1

1. Your comments make perfect sense.

2. Your comments are logical. The word that strikes me most, however, is "presumably".............I'd love to know what actually happens/happened


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## Colby (18 Jan 2016)

Back to original topic....are these people still in business, same concept etc personally would love to see my folks doing this and heading off on a cruise or something!! http://www.seniorsmoney.ie


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## Bronte (19 Jan 2016)

Colby said:


> Back to original topic....are these people still in business, same concept etc personally would love to see my folks doing this and heading off on a cruise or something!! http://www.seniorsmoney.ie



That's exactly what I said earlier in the thread, if later in life we want to take equity out of our home to which we alone contributed we should be able to do so and go on a cruise if we so wish.

The Seniorsmoney website is very well laid out and very clear on what they are about including the interest rate charged.  One thing though that is missing is a table showing how much would be owed on a loan after say 10 or 20 years.

What's really terrible though is as a result of Moan to Joe and of Charlie Weston's article Irish banks will refuse to give out these types of product and there are many cases where it would be very beneficial to those receiving it, for major repairs, to pay heating bills in winter, to convert a bathroom for an elderly person, to have an operation privately to avoid waiting lists.


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## Bronte (19 Jan 2016)

*David's mother
*
Background

She was 82 years of age and wanted 8K for a car.  She got a flier through her mailbox from BofI about the loan.  She had a meeting with them and they valued her house at 201K and offered her 63!  Her son intervened at that stage as she didn't understand the loan he felt and he negotiated the loan amount to 25K !  This was 2001, there was also something about an 8K overdraft being approed on condition that she get the life loan.  (I assume this was a temporary loan to get the car but I cannot be sure, and I also assume it was repaid pretty immediatley when the life loan of 25K came through)

2013

The mother now had dementia. Agreed with the bank to sell the house to pay for her care.  The original loan of 25K was now 68K but it took until Oct 2015 to sell and the loan was by then 86K.

Bank (David's words)

David *engaged* with the bank, he was worried about the level of *indebtedness*, the bank was *ambivilant*, he offered 50K in full and final settlement, bank *not flexible*, waste of time *engaging* with them, he's in business all his life, *no understanding* by the bank, bank *opportunistic* with a women in her eighties.  She's now 96.

Questions

1. Was David ommiting to tell the audience that 25K was in IEP not Euro.  Therefore 32K.
2. What happened the money, 8K was for the car, but what happened the rest of the money, did his mother give it to him maybe
3. David is attacking the banks attitude now but he, a businessman all his life, negotiated the original loan for her

I thought in particular given David's assertion that he was in business all his life and given he negotiated the origional loan that he was now attacking the bank as being a total chancer.  I also didn't understand why he didn't loan or borrow the 8K for a car for his mother and she could have repaid him weekely odd.  But she probably wanted her independence, as is her right.


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## IsleOfMan (19 Jan 2016)

I wonder was €25k the minimum loan that they would consider?  Maybe the original €63k was arrived at by discussing the new kitchen, holiday, car, re-design of the garden etc.

I remember when property prices were collapsing back in 2006 one of the financial advisers in the First Active in Stillorgan was trying to get me to invest in their property bond based on the previous 10 years growth. This guy was nothing more than a snake oil salesman.

There are great financial advisers out there but there seems to be an overwhelming number of poor financial advisers being let loose on the public by their masters with little consideration for their customers real needs. Should an 82 year old be allowed to discuss a matter such as this without additional advice. Thankfully this woman, who didn't understand the loan, had a son who did. I know that 82 year olds can be very determined when they get a thought in to their head though.


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## postman pat (19 Jan 2016)

Bronte said:


> He loves spinning. He's a total master at it.  That's what makes him so good at his job.  One may not like him but his show does get an audience and he does though tackle some institutions that deserve to be tackled.


I aggree Bronte,its just when he got so many things wrong that day..i kinda winced a bit


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## RMCF (19 Jan 2016)

IsleOfMan said:


> I wonder was €25k the minimum loan that they would consider?  Maybe the original €63k was arrived at by discussing the new kitchen, holiday, car, re-design of the garden etc.
> 
> I remember when property prices were collapsing back in 2006 one of the financial advisers in the First Active in Stillorgan was trying to get me to invest in their property bond based on the previous 10 years growth. This guy was nothing more than a snake oil salesman.
> 
> There are great financial advisers out there but there seems to be an overwhelming number of poor financial advisers being let loose on the public by their masters with little consideration for their customers real needs. Should an 82 year old be allowed to discuss a matter such as this without additional advice.* Thankfully this woman, who didn't understand the loan, had a son who did*. I know that 82 year olds can be very determined when they get a thought in to their head though.



Looking at what I assume this David fella was saying on Liveline (if Bronte's post 56 is true) then did he really understand the loan, or is he just arguing a case that suits him now?


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## Bronte (19 Jan 2016)

ClubMan said:


> I'm not talking about the life loan issue here.
> The life insurance/assurance policy thing on Liveline also related to combined insurance/assurance and savings/investment policies that were sold.
> Many (especially working class) couples bought these in the 70s/80s and paid in for years.
> My own parents included. I'm sure that many of us remember the "insurance man" calling to collect premiums every week/month?
> ...



I think we're at cross purposes here.

*Life Loans*

The two life loans from last week, there was no issue with those, they were not mis sold etc.  But the callers were more than likely upset about their inheritences.

*Life insurance tied to mortage or Term insurance*

Joe Duffy got confused on this yesterday when he was dealing with the more complicated 'investment life insurance policies.  This 'term insurance' is required as a condition of a home mortgage.  It's to pay off the mortage should you die.  It is not a savings product generally (though it can be), the amount it will pay out decreases in line with your mortgage.  When your mortgage is paid off you stop paying the insurance and that is the end of the matter.  An insurance similar to car or house insurance.

*Life insurance as a savings product*, could be for education or a nest egg.

I didn't hear the show but my husband did, he as it happens had the hard sell back in the day with Irish Life.  He knew the sales guy and over time he 'persuaded' my husband to buy into one.  Late eighties, and I came along and 'persuaded' my husband that it was a waste of time and to get out of it.  They were were very complicated, he got back less than he had put in, but he 'invested' the proceeds in our first home.  The problem with them is that they are essentially a hard sell con job for the unwary as you've pointed out.  The initial premium sounds reasonable enough.  And you get lovely brochures with 'projections' but no 'guarantees'.

The low premium, the glossy brochure, the projected great returns, are the lure.

The salesman's incentive is generally a full years premium, hence the hard sell.

And if that wasn't enough, the life companies could come back to you later and say you've now to increase your premiums to get the origional return projected and generally this increase in preumium was not just from say 50 to 60 Euro, but 50 to 200.

*Hard necked chancers*

This I thought only referred to people coming on the radio and saying they were mis sold products when quite clearly they weren't.

Speaking of the eigthties, or early ninties, the other great scam was a type of mortgage, that was supposed to pay you a lump sum when you were at the end of the term.  They were a dud.  But all the banks were pushing.  Known as Endowment mortgages, my BIL had one of those but luckily pulled out three years in.


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## Steven Barrett (19 Jan 2016)

IsleOfMan said:


> I wonder was €25k the minimum loan that they would consider?  Maybe the original €63k was arrived at by discussing the new kitchen, holiday, car, re-design of the garden etc.
> 
> I remember when property prices were collapsing back in 2006 one of the financial advisers in the First Active in Stillorgan was trying to get me to invest in their property bond based on the previous 10 years growth. This guy was nothing more than a snake oil salesman.
> 
> There are great financial advisers out there but there seems to be an overwhelming number of poor financial advisers being let loose on the public by their masters with little consideration for their customers real needs. *Should an 82 year old be allowed to discuss a matter such as this without additional advice.* Thankfully this woman, who didn't understand the loan, had a son who did. I know that 82 year olds can be very determined when they get a thought in to their head though.



Another over the age of 60 is deemed to be a vulnerable person and any advisor is supposed to recommend that they talk it over with a family member or friend (I think 60 is a bit young, that would include lots of working people as vulnerable). 

If in this liveline case, an 82 year old was sold a complex financial product without independent advice, they should be hung. It is clearly not the case though. 

Steven
www.bluewaterfp.ie


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## Brendan Burgess (19 Jan 2016)

SoylentGreen said:


> It was like one idiot talking to another idiot. Joe Duffy called in John Lowe to help out.
> He allowed a woman to come on the show who said that a €20k life loan was now €180k after 10 years at 6.5% compound.



Are you saying that John Lowe did not challenge that? 

That is terrible. 

Brendan


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## RMCF (19 Jan 2016)

I had to stop listening to the show just as John Lowe came on, but the case of the 20 becoming 180 was before he was on, so perhaps it wasn't brought up again to him.
I'm sure he would have shot it down if he had been asked.

Joe's dragging plenty of airtime out of this topic for sure, looks like he will get the full week out of it at this stage.

Pity we couldn't get a more balanced argument, but then again you often don't on the Liveline. The sensationalist, not 100% truthful callers make for better radio.


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## Brendan Burgess (19 Jan 2016)

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

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%


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## RMCF (19 Jan 2016)

Brendan Burgess said:


> I got a copy of the Life Loan documentation handed out when the mortgage was taken out.
> 
> It's couldn't really be any clearer:
> 
> ...



Why let the facts get in the way of a good moan/rant though!


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## Black_Adder (19 Jan 2016)

The Bank of Ireland never advertised Life Loan and most certainly did not send out 'flyers'.
Second this thread has gone miles off the point - should it be separated as there is good stuff on life policies.


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## Brendan Burgess (19 Jan 2016)

Black_Adder said:


> Second this thread has gone miles off the point - should it be separated as there is good stuff on life policies.



* Joe Duffy Show on Whole of Life/Investment policies *


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## Brendan Burgess (20 Jan 2016)

OK, I listened to yesterday's programme 


Joe Duffy 19 January



My Aunt took out a loan of €40,000 10 years ago when she was 85

The house was built in the 50s. She wanted windows and an alarm system.

She went ahead not understanding at 80 something.

She paid back €20,000

And now she owes €185k - that was two years ago. WE don’t know how much it is today.

Joe: She gave them the deeds as collateral

She had no understanding of compound interest

How much is the house worth

Around €250k .

She is devastated . Totally devastated.

This was covered in the Indo last Wed. The banks said that it was a way to let people get money.

She: These people revered the bank manager.  (So it was presumably Bank of Ireland and not some sub-prime) 


*Later he had John Lowe on *


Joe: A €20k loans has turned into €185k 

Lowe: They doubled every 10 years as a rule of thumb.

I went to a house in Torquay Road and it was a kip because they had no money.Their kids had a great time on the sales proceeds after the parents died. 

We have an ageing demographic

Joe: So you are saying that the life loans are a good product

Lowe: I would be quite happy to take out a loan if I had no income


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## Brendan Burgess (20 Jan 2016)

That story is rubbish and Joe should have questioned it. 

1) Which lender was it?   
2) I don't think that a borrower is allowed to partially repay a life loan.
3) Did the caller see the actual documentation?  €20k does not go to €185k in 8 years.  I suspect that the aunt borrowed a lot more and did not tell the daughter. 

And of course, there is a small possibility that the bank made a mistake in the calculations and so the caller should check them anyway. 

€20k to €185k is a rate of over 30%.

Another possible explanation is that she borrowed the money from Ron Weisz.  But then she should not have been talking about Life Loans. 

Brendan


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