Fair Deal and Life Loan, decisions required.

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Boroman74

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Hello All,
My in laws have a house worth circa €850K with a Life Loan from 2007 now currently at €250K racking up interest of over 6% I don't know the exact details.
They are both in good health and are in their early 80s.
Does anybody know how this will effect them for when the Fair Deal scheme be required ?
&
They have 2 daughters, is it in their best long term interests to pay off the loan interest accrued and yearly from now on or pay off the whole debt with whatever legal and penalty fees apply?

The in laws do not want to sell the house.
 
There are 2 implications here. Firstly, Fair Deal will assess the assets, including the house, as if the Life Loan did not exist. You can't offset it against the value of the house.

Secondly, it may have an impact on the ability to take out the Nursing home loan as there is already a charge on the house
 
Boroman74 said:
I don't know the exact details.
Click to expand...

You would need to know the exact details for anyone to make a meaningful suggestion.

Forget about the Fair Deal as it doesn't look as if they are going to need it for some time, if at all.

Presumably the two daughters will inherit the house.

So they should look at the borrowing as their own borrowings. If the interest rate is 6% and they have cash lying around, then they should clear the loan.

I presume it's a Bank of Ireland Life Loan.

Bank of Ireland - Lifeloan

Hi, BoI previously provided an equity release product, called a "Lifeloan" (essentially an intetest roll up, product). Does anyone happen to have a copy of the terms and conditions for this product, please? Amongst other things, I'm wondering: * Can the loan be repaid, in part or all...
www.askaboutmoney.com

The interest rate was fixed for 15 years and they generally charged a lower rate after that, comparable to the BoI's SVR. So they are probably paying 4.5% and not 6%.

But if it's now on a variable rate, then there would be no penalty for paying it off early.

But you need to know the details to make a better decision.

Brendan
 
HSE will need enough equity before they will approve an ancillary state support loan for fair deal, so it really depends on the situation at the time when-if- they need nursing home care. If it were possible to pay off the whole debt, you could suggest that they transfer the house to their 2 daughters, retaining a right of residence. There is a 5 year look back, but provided they don't need nursing home care in the next 5 years, then house would no longer be taken into account for the financial assessment for fair deal if nursing home care is needed,, and daughters would have security that they are the owners.
 
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