Life Loans are back

Hi.Does anyone know if one [a single person aged 70] is registered under the rent a room scheme on their private residence do they have to cease this scheme first if they want to qualify for seniors money loan on it.Thanks.P.S.Also why is Ireland so far back with simply giving normal morgages and remorgages to seniors who can afford it with repayment terms up to age 80 and 90 years of age same as in the United States and in British building societies where not to do so is considered discrimination against senior citizens.Thanks.
 
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Baby boomer said:
Now if it could be combined with an annuity type product to give a regular income....
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I understand that in the UK, there are products which pay out a monthly or annual amount, so that people are not paying interest on money they don't need.

But with much higher pensions in Ireland, I suspect that most people borrow the money to refurbish their homes.

Brendan
 
Listening to people ringing in today to Joe Duffy show it was awful to hear the stories of older people who took out these loans on their homes if e.g they needed money to support a spous needing a nursing home and the cost of those. on a weekly basis People were left owing huge amounts way above the initial loan figure taken out. People were left owing the banks money when a parent had passed away and their home was sold. It was just awful to hear these stories. I felt huge anger at the banks putting vulnerable people through such awful trauma. The stories were like we often heard of these money lenders except this time it was our banks.
 
midleton said:
I felt huge anger at the banks putting vulnerable people through such awful trauma.
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I presume you are being serious and not sarcastic?

midleton said:
People were left owing huge amounts way above the initial loan figure taken out
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That is what interest is. It accumulates if they don't make any repayments?

These people took out loans 10 or twenty years ago. They needed the money. They were given a full and clear illustration of how much it would grow to.

They were under no pressure from the bank to take out these loans.

They got independent legal advice, so that they knew what they were doing.

The Bank of Ireland did want them to involve the children in the decision, but the Law Society objected strongly to that.

Brendan
 
Plus none of those on the show took out the loans to pay for a spouse in a nursing home, that would not be a good reason to take out one because of the Fair Deal situation. The two examples I heard mentioned wanted to help kids with deposit and education and other one was to travel to see children/grandchildren abroad regularly.

If I remember correctly the value of the house was the upper limit the loan could accumulate to so you didn't end up owing more than the value on death. I'm no major fan of banks despite working in one for years but really they are not the VdeP, they are going to want interest on their money!

Nobody on mentioned and Joe didn't ask what alternative these people had to get a few bob to do the things they wanted to in their later years, now I don't think I'd borrow to help kids out unless it was serious need but to make your own life more comfortable or to travel etc then I don't see the problem.

I know I would have encouraged my father to go for this in his later years but the product had disappeared at that stage, he could have used the money to make his house more comfortable and improve his life in several ways, yes there is a cost in interest but that's the way it works, obviously it would be better to make repayments monthly on the loan but the whole point is it's for people who have the asset but not the income. So what if there was no surplus left in the house value at the end! Other alternative is that family who want to inherit any value help out earlier on when it's needed but they are not always in a position to do either.

I think this sort of product definitely has a place and is needed by some but the interest rate is the problem or at least it was when those particular loans were taken out, not sure what rate is being charged now on the relaunch but if it was low enough I can't see the problem IF people know exactly what they are getting into, very few really read the small print or even listen to what they are being told in a lot of cases.

I hope they call you back Brendan and have you on, there really should be some balance to that discussion.
 
Can the applicants ask for an interest only payback option?

That could be paid by the children or those who will inherit the property. It would, at least, mean that the loan remains stable and doesn't accumulate compound interest.
 
BoI life loans have mostly finished their 15 year fixed rate period. The current variable rate is 3% so the kids can pay this or more if they wish.

The seniors money life loan allows annual repayment of 10% of the amount borrowed, so yes the kids can pay the interest
 
I’m listening to it now.

It’s farcical, an absolute embarrassment. I think I’m listening to Gift Grub rather than Liveline.

The first lady borrowed €80,000 to help her daughter to buy a property and to buy a car.

At the time the property was worth €600,000.

It fell in value to €400,000.

She now owes €204,000 and the house is worth €550,000.

And she’s giving out and going in to the bank asking them to “meet her half way”.

She’s weeping about not wanting to “having to give her house to The Bank of Ireland when she dies”.

Get off the stage!
 
Gordon Gekko said:
I’m listening to it now.

It’s farcical, an absolute embarrassment. I think I’m listening to Gift Grub rather than Liveline.

The first lady borrowed €80,000 to help her daughter to buy a property and to buy a car.

At the time the property was worth €600,000.

It fell in value to €400,000.

She now owes €204,000 and the house is worth €550,000.

And she’s giving out and going in to the bank asking them to “meet her half way”.

She’s weeping about not wanting to “having to give her house to The Bank of Ireland when she dies”.

Get off the stage!
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Although we cannot be sure that the implications of the loan were clearly laid out to the borrowers.

Can you really see a BofI salesman, paid on commission, telling an elderly applicant that there is a very real risk that the entire house will become the property of the bank, within 10 or 15 years.

I know the legal documents are full of warnings, but the salesman should be obliged, by law, to demonstrate clearly the implications of these high interest loans.

A simple chart demonstrating how the debt will grow, each year. You know, like the ones they show us when they are getting us to invest in their pension schemes, or equity funds. The only difference being the 8% growth on the debt, each year, is guaranteed, rock solid.
 
Allpartied said:
A simple chart demonstrating how the debt will grow, each year.
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Yes, this was in the standard brochures, illustrating the growth over 15 years. I'll try upload a copy later when I'm at PC.

Remember, in the main, these were products that the customer asked for. It's wasn't sales people ringing up elderly customers offering it to them out of the blue. The customer had to have a solicitor before they could get it, and were encouraged to get independent financial advice and discuss it with their families.

Put yourself in the mind of someone in their 40s in 2006. Property prices were increasing more than the interest rate being charged. People didn't care. They wanted money now, their parents were sitting in a big house worth a fortune. And yes, in my opinion the majority of borrowers who took big sums were doing it to help their families rather than live a more comfortable life themselves.

In my opinion, someone in their late 80's shouldn't be worrying about not having anything left to pass on to their children. And their children should be making sure they're not worrying about it.
 
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