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

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?
 

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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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
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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.
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Are you saying that John Lowe did not challenge that?

That is terrible.

Brendan
 
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.
 
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%
 

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