If you are wondering why lenders don't do Life Loans anymore...

In the Bank of Ireland case customer was obliged to take independent legal advice and have a will.

The Law Society blew a head gasket about the insistence of the Will (see Law Society article) and overlooked the fact that the Executor would have to
know in advance what the person was doing.

Family members are such that when their father or mother were obviously in need they were often blind to it.
 
Leper said:
The product is useful to the lending institution, not to most people receiving the loan.
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Hi Leper

That is a strange take. Most lending is supposed to be profitable for the lending institutions including ordinary mortgages.

These loans are available in many countries. They are used for many good purposes e.g. to adapt the home to the elderly person's needs. They are used to help a child get on the housing ladder. And occasionally they are used for holidays.

There is nothing at all wrong with the product.

It's a shame that they are not available here because of the difficulty in collecting at the other end.

Brendan
 
I have a very elderly relative receiving 24-hour home care in a very valuable house. He's paying for it from savings but that will run out.

At that point incentives push him toward into a nursing home due to the Fair Deal scheme, but what he'd really like is to live out his days in his own home if possible.

A life loan would be absolutely perfect for him.

It's his wealth, but he's not really allowed to access it which seems a pity.
 
Brendan Burgess said:
The BoI one was the most popular and the interest rate was fixed at 6% for something like 15 years.
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Back when base rates were a lot higher too!

If I were a bank and had people literally lending me billions at 0% I think I could make a profitable life loan at 3% today.
 
WizardDr said:
I would think the Reversion product as it was structured and called was a ripoff.
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I didn't like them at the time and much preferred the Life Loan.

But with the collapse in house prices, the Reversion product looked like a good deal for many customers.

Brendan
 
There was a report in the Sunday times a couple of weeks ago that Seniors Money had now got funding (from Deutsche bank) and were preparing to re enter the market early next year.
 
It's not clear from the newspaper report, how much the loan + interest due would have been?

Loan taken out in 2007 (52k) and death in 2015.

Can anyone do the sums and give a rough estimate?

The 'sleeping under a bridge' makes great headlines, but you do wonder what they expected to happen after the father / grandfather died. They must have known the loan was due?
 
I understand that Covid has made most things a little more difficult for everyone, especially where people have lost jobs etc. and I am not discounting that it may not have been possible for the family to source alternative accommodation since February when the court clearly told them that they had no right to the house. However, it does seem as if there is a bit of a bias in how this is coming across. The story is only being told by the family and what has been told has been dressed with pathetic touches designed to elicit sympathy (Dad had Alzheimer's, brother, mother, nephew all committed suicide in the river close to where they've had to huddle for warmth, only option is to "walk the streets", etc). The honest truth is probably far more kind to the lender. The house should have been sold when the father died in order to pay off the debt, it doesn't matter if it had been occupied by the family for 60 years, the asset was the father's to dispose of as he wished and he decided in 2007 that he wanted or needed money and agreed to allow the bank to have his house as security. I don't get the feeling that they ever attempted to honour that agreement, it seems that they expected to get the house. They've had 5 years rent-free accommodation, have they made any efforts to actually source alternative accommodation? I can't but be suspicious of their motives.
 
So based on @so-crates figures.

Let's say that the house sale in 2015 might have cleared the debt but left nothing else.

If, as a family, they were unable to raise a mortgage in their own name to clear the debt, then from their perspective their best outcome was to live rent-free for the past 5 years.

Also, now that they are homeless, having been evicted, they are on a priority list for housing.

I'm not condoning their actions, but if this is the system we design, we can't complain when these are the outcomes.
 
We don't know all the personal facts in the case. This is not the only case either. The product stinks from the very start i.e. giving large amounts on loan to somebody who is going to die sooner than later who likely isn't capable (my opinion) of calculating the full consequences of such a loan. The lending institutions are no longer giving out such loans - Good! - This alone shows that the product isn't good.

Off the point but somewhat relevant, back in the late 1970's there had been plenty of industrial strikes where management refused to talk with unions while the strike was ongoing. Management wanted the strike to end before talks could take place. The unions wanted talks during the strike. Charles Haughey (to his credit) advised employers/management/unions to do business differently and civilly to ensure long industrial disputes were a thing of the past. In this instance the financial institutions must do business in a different way and if this means never giving out such loans again, so be it. But handing out large amounts of cash to people who might not be fully aware of the total implications involved is crazy.

. . . and if anybody thinks I think that loans should not be repaid, they are wrong. But, the financial institutions must do business differently.
 
so-crates said:
he story is only being told by the family and what has been told has been dressed with pathetic touches designed to elicit sympathy
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Are you suggesting local papers don't have teams of fact-checkers to follow up every detail in what the journalists turn in?
 
Leper said:
The lending institutions are no longer giving out such loans - Good! - This alone shows that the product isn't good.
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Does it? Or does it show the difficulty in exercising security makes such loans more troublesome than they are worth? Does it show one of the reasons why mortgatge interest in Ireland is higher than elsewhere in Europe?

Leper said:
But handing out large amounts of cash to people who might not be fully aware of the total implications involved is crazy.
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Why ? Because of age? If this person had decided instead to sell his house should it have been allowed or disallowed ? Should a different test of capacity apply in situations like this as opposed to, say, a will?

Why should older people not be enabled to use the value of their assets to their own benefit (as they see it) in their remaining years - rather than being trapped into preserving it for their estate?
 
Early Riser said:
Does it? Or does it show the difficulty in exercising security makes such loans more troublesome than they are worth? Does it show one of the reasons why mortgatge interest in Ireland is higher than elsewhere in Europe?
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Yes.

These loans will only ever by a fraction of one per cent of profits of a big lender like AIB or BoI.

Meanwhile a single case makes national news. These have turned upon Liveline before as well I believe.

Big banks care more about their reputation than the small profits that these products generate.

This is why specialised lenders (maybe with non-bank funding) will be the only ones who get back in the market.
 
Brendan Burgess said:
I didn't like them at the time and much preferred the Life Loan.

But with the collapse in house prices, the Reversion product looked like a good deal for many customers.

Brendan
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The maths with the REversion product:

Say full value of property was €100k
Say you sold full interest and received €42k. - bear in mind you had a life interest.
Property prices would have to FALL 58% (and not recover) to be 'out of the money' at the date property was sold.

The key aspect was the % in the € they offered at the start.
This was an extremely expensive product and Bank of Ireland did not provide it itself for that reason.
 
I remember having a conversation with a bank exec. in the 2000s as to why they weren't doing them as it was an obvious enough gap in the market and yes some banks were very scared of these lifetime loans because of the risk of this type of dispute/ messing around afterwards.
 
mtk said:
some banks were very scared of these lifetime loans because of the risk of this type of dispute/ messing around afterwards.
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And even though they are profitable it is tiny in the scheme of a bank's total operations.

That's why they won't bother.
 
I did one of these for my parents in law, structured as follows:
1: Look at what the monthly cash requirements are for the relative.
2: Agree a loan with the bank on the basis that the loan increase every month by the monthly cash required, max of 100K in capital at year 20 .
3: Being a loan it did not impact on SW payments means test etc.
4: It was secured by mortgage on the house and I personally g/teed it.
Both died, house sold, job done
 
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