# Good new Life Loan product for elderly people



## Brendan Burgess (12 Jan 2006)

Please note that the rates quoted are out of date, so check them before you enter any contract. The Financial Regulator brought out a guide in February 2006 which would be worth consultin


*A comparison of Life Loans for elderly people* 

This post covers loans only and does not cover residential reversions, where people sell a part of their home. The pros and cons of these products are discussed 

*SeniorsMoney 60 Plus loan*

This is the best product if there is a chance that you may be able to repay it at some stage in the future. 

Interest rate is 5.44% variable. Do they give a guarantee that they will track the ECB rate? This compares to a fixed rate of 6.35% for SHIP and a fixed rate of 5.5% for Bank of Ireland. Interest rates are expected to rise so the Seniors Money product will become dearer than Bank of Ireland and may become dearer than SHIP. 

Minimum loan: €20,000
Maximum loan: €500,000

You get approval for a loan at the outset, but you don’t need to draw it all down at the one time. For example, if you are aged 70 and you have a house worth €500,000, you will get approval for a loan of €125,000. If you only need to borrow €20,000, then that’s all you borrow. If you need another €20,000 in three years’ time, you get it automatically. 
This is an important distinction as otherwise, people borrow a large lump-sum at a high interest rate and put it on deposit at a low interest rate. 

Costs €1150 to set up and €100 for drawing down more approved money. The €1150 covers “independent” legal advice. I don’t understand this as my solicitor could charge me anything? Will they refund whatever my solicitor charges? 

You can repay the loan at any time. So, for example, if your children are in a position to lend you money in a few years, they can do so and you can repay the loan. Bank of Ireland and SHIP don’t allow this. 

There is a regular income version available, but there are no details. 

SeniorsMoney is not regulated by the Financial Regulator in Ireland, although it is subject to the Consumer Credit Act. Check this out?

*Bank of **Ireland** Life Loan*

Minimum loan: €20,000 ( Banking365 suggested it was €5000?)
Maximum loan: €250,000
Interest rate: 5.5% fixed for 15 years 
Initial charges: Your own legal fees and surveyor's fee - c. €1000

This is a better product if you want a larger amount of money and you know that you won’t want to repay it as the lowish rate is fixed for 15 years. 

Downsides:
You can’t repay it until you die or move out of your home permanently. 
They will provide top-ups. You can use your own solicitor, or you can use the Bank of Ireland in-house legal team at a cost of €220.
Bank of Ireland is regulated by the Financial Regulator. 

*SHIP*
Minimum loan: €25,000
Interest rate: 6.35% fixed for the life of the loan
Initial cost of set up: You pay your own legal fees and valuation fee – c. €1000
In practice, you can’t repay it until you die or move out of your home permanently 
Early repayment: Possible, but not advisable as it is subject to early repayment penalty. 
What’s the story with top-ups?

SHIP is not regulated by the Financial Regulator in Ireland, although it is subject to the Consumer Credit Act.


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## asdfg (12 Jan 2006)

Another Downside is that this lump sum is taken into account when calculating assets (cash) for those on non-contributory old age pensions.


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## irishjim (8 Feb 2006)

I have a friend who's parents are c.57 / 58. Is there a similiar type of life loan for people in their mid-late 50's?


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## uftie (2 Nov 2006)

I've been looking at some of these products for my parents, who are interested in raising some cash based on their house in Dublin, and the  Residential Reversions (RRL) product looked interesting, whereby the cash is a lump sum that is paid in return for a fraction of the value of the home. They use a formula whereby they hand over that fraction of the valuation, discounted by some factor related to the life expectancy of the owners. Obviously the result of this calculation will determine how competitive the product is (anybody have any experience of this?) but the fact that the fraction of the house value remains fixed is attractive at least, so its not possible to get to a situation whereby the remaining value in the house is eaten up by the compounded loan value for instance.


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