# Why Bank of Ireland does not do Life Loans anymore



## Brendan Burgess (11 May 2018)

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 to bank saying that other joint executor was refusing to vacate the house and was now a trespasser.  (The joint executors are sons of the deceased) 
June 2017 - proceedings issued. 
May 2018 - Order for possession granted - with a three month stay. 
It will probably be another 6 months before the Bank gets their money. 

Bank got their legal costs against the occupier who said in court that he had no means. Not sure if they will be able to get them from any equity that might be left in the house. 

Having said that, they have been collecting 6.9% interest or €116 a day, so there is plenty left over to pay the legal fees. 

But that is the problem facing lenders doing such loans. The children often are reluctant to give up the property. 

Brendan


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## RedOnion (11 May 2018)

Brendan Burgess said:


> Having said that, they have been collecting 6.9% interest or €116 a day, so there is plenty left over to pay the legal fees.


The word 'collecting' might be a bit strong.
Assuming no repayment made, balance now would be in excess of 680k.


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## LDFerguson (11 May 2018)

RedOnion said:


> The word 'collecting' might be a bit strong.
> Assuming no repayment made, balance now would be in excess of 680k.



If memory serves, Life Loans were only given up to 45% of the then value of the property.  Which would suggest that the property was worth €800,000 in December 2008.  If the bank can also add their legal costs to the loan, the value of the property might still be sufficient to give them their interest when it eventually sells.


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## RedOnion (11 May 2018)

Ah yes, I forgot there was a limit to these. If they stuck to it.


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## Brendan Burgess (13 May 2018)

Yes, the balance is currently €640k. ( A neighbour's house is currently for sale for €945k) 

I think that the other executor wants this sold as quickly as possible to preserve whatever equity is left.

It's an odd one.  If they lent 45% of the value of the home, then with accumulated interest, it's possible that it did go into negative equity.

The delay has probably suited everyone.  Because house prices have been rising faster than the interest rate in the past few years.  The trespasser got a house to live in. The bank will get their money and the accumulated interest back. And the other executor (and beneficiary)  now will get some equity.


Brendan


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## LDFerguson (13 May 2018)

Yes I'm struggling to find a "loser" here.  The son who didn't live in the property will end up involuntarily paying half the legal costs.  But if there had been no delay he might not have got anything at all.  Now with the increased value of the house he probably will. 

My idle curiosity wonders what the original owner did with €360,000, five years before death.


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## Brendan Burgess (13 May 2018)

LDFerguson said:


> The son who didn't live in the property will end up involuntarily paying half the legal costs.



Actually, the Registrar granted the order for costs against the first borrower who said he had no means. 

Brendan


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