Life Loans are back

2. Marketing/Gouging/False promises/Evil Banks

As demonstrated by Burgess with his link at the start of this thread this is a very simple product, akin to a mortgage, easily explainable. Even the most financially literate person can clearly read that simple well laid out brochure and understand what the product is. And if people on the radio, who didn’t sound stupid to me are saying that their parents couldn’t understand these products then their parents should not be in charge of their pension much less their home. How did these people buy houses, manage weekly finances, pay utility bills bring up their children.

David Hall over and over, along with the Callers went on about bailing out the banks. What on earth has this to do with the topic. Are the Callers and David suggesting that people should not repay money they borrowed freely.

Burgess is entirely correct to point out that shows like Liveline will make banks reluctant to offer this product. It's also correct because of Irish people's attitude to debt and the amount of people who got away with paying nothing back that the interest rate on these loans are 'high'. (I don't consider 6% high but I'll leave that stand for now)

Repayment Events on Lifetime Loan - Spry Finance

Repayment Events The clue is in the name: A Lifetime Loan is designed to last for as long as you remain living in your home or as long as you live. The loan does not become repayable until one of the following ‘repayment events’ arises: Sell the home The loan is made against your specific […]
www.spryfinance.ie

Basic simple stuff. A child could understand it. With the most simplistic of warnings in clear writing at the end.
 
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3. Legal Advise – Solicitor Financial Advice – Independent Financial Advisor

Each and every client only received a loan if they had independent legal advice. Which from Liveline you’d be hard pressed to figure out. For those that were on the show and seemed misstified on how it works: you go to the Bank to get the loan, they explain the product to you and tell you you must have a solicitor. You go to your solicitor who explains to you that the product you are buying is a life loan, and what it means. You sign a document stating you understand, your solicitor confirms this to the bank, the solicitor gets your cheque and transfers the money to the Client.

The Law Society is entirely correct that the Borrower is not to involve their childen in this. It's the parent's business. It's the parent's decision and it's the parent's asset.

Financial Advice

It was highly recommended to get Financial Advice, it’s not clear if many did, presumably because the product is quite simple they didn’t need financial advice. OR they didn’t want to pay for it. OR they wanted the money. OR their adult children were pressurising them to get the loan to give to them to buy their own home, pay for a wedding, help out with children’s debt (consolidation) or to consolidate their own debts.
 
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4. David Hall - the populist.

All he does every time he’s on the radio is take a pop at the banks. He’s very careful to always side with the listeners. He knows full well these were not bad products, not complex products. But he makes a living out of people who made stupid financial decisions so he’s not going to admit that it was people, particular their adult children who are at fault here.

Next, in no particular order - I'm a bit busy and will be back. Any corrections welcome, also for some reason my link to historical interest rates won't wok on AAM

  • Joe Duffy
  • Case study David.
  • Case study Siobhan
  • Brendan Burgess
  • other expert
  • Greedy adult children who have some neck.
 
Case Study Ann - very lively sprightly with it 80 year old

- Purchased 4 bed semi D in 1973 (purchase price anybody?) with a mortgage
- Paying 15% interest on mortgage - she knows her interest
- Paid off 1990
- Sept 2005 borrowed a Life Loan from BofI of 80K value then 600K @ 6.1%, it was she instigated this
- said everything was explained to them, had to wait to get money as it wasn't easy
- Money used for a decent deposit on daughters house and to put their son through education, plus a car that they still have
- House in the crash was worth 450K
- Now worth 550K - she was cagey on this
- Owes 204K currently
- Last Sept she went to bank for them to meet her half way !
- If she lives 10 years the bank will own her house so she'd rather be dead
- After 15 years the interest rate is now 3%

Observations
- Joe is well able to calculate, he knew the loan was about 13% of the value, his saying they owed half a million turned out to be 204K
- Ann regrets her decision, feels she's trapped, well able to give us nonsense, gave us full details and then mentioned she'd problems with her eyesight suggesting to us she hadn't been able to read the documents, and then said she didn't hear about the compound interest when she took out the Loan, yet was able to clearly outline all figures and interest rates including her pride in paying off their mortage in 1990.
- wonder what pressure the daughter put on her
- wonder what the daughters house is worth now
- odd about the son in education when the parents were 65
- I suspect house is worth way more than 550K (anyone what is a vey nice semi D, 4 bed in nice area in Dublin worth?)

Contradictions
- said she thought her husband would die at 60 as all his family did, which given he was 65 when they took out the loan makes no sense
- not knowing interest
- saying she didn't know the loan would go up, up and up
- said she went to a financial advisor and he was no good - I suspect he told her to sell
- not being able to read
- son in college
- saying she thouht when the property value declined in the crash the bank would reduce the interest rate, which means she knew exactly tha the amount was going up up and up.

Solution
Sell house, realise €346 K, buy one bed, live more cheaply in a more manageable suitable for 80's property. Like what is the actual problem here. She could have done this years ago. And she knew this already in 2016 as she listened to Joe on the subject then. And this is a sob story !

Opinion

I think it's very sad an elderly woman feels bad that she's not able to let her children inherit, that's what this is about. And I wonder what pressure is being put on her there. She clearly did everything for her children and she doesn't want to give up her house which is her pride and joy. So what if the bank gets it, she's not taking it with her, she fully knew what she was doing and she actualy has a choice right now, especially with rising propety prices but it's a choice she doesn't want to make, worse 4 years ago she could have moved.
 
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Bronte said:
- If she lives 10 years the bank will own her house so she'd rather be dead
- After 15 years the interest rate is now 3%
Click to expand...
This was actually a piece that upset me when I listened to it. Not the facts, but the emotions the woman was going through, and I really hope the show reached out to this lady to offer her support after feeding on her emotions like this for the purpose of creating a radio programme.

Lets look at facts.
Currently owes 204k. House worth c. 550k. (listeners figures)
Even if interest continued to accrue at 6% per annum (it's currently 3%), in 10 years time the balance would be approx 365k.

As you've noted, they could easily sell now, repay the loan, and have enough to downsize and owe nothing to anyone.
 
And her kids would get the new property. I suspect it's not the bank is the problem, it's the children's inheritance she's crying about.

You're bonkers if you think Liveline will do anything. They feed off people like her.
 
Just listened back to the podcast from Wednesday and Thursday (better than listening live, the ads are it from the podcast). Did the topic come up on the show today?
 

1. I think Brendan said that he had spoken to senior managers in AIB and they were not interested in these products, because of the bad publicity and the flack they would get from programmes like Joe Duffy's. It's a pity because , with competitive rates, they can be good products.
2. It seems high now, because interest rates are historically low today. Certainly the Spry offer is high, but they're the only players in town, so they can put out a rate and see what flies. They don't mind the flack, because they are not a high street brand.
 
https://www.*****************.com/history-of-mortgage-rates-in-ireland.html

  • 1975 11.25%
  • 1976 12.5%
  • 1977 13.95%
  • 1978 14.15%
  • 1979 14.15%
  • 1980 14.15%
  • 1981 16.25%
  • 1982 16.25%
  • 1983 13.0%
  • 1984 11.75%
  • 1985 13%
  • 1986 12.5%
  • 1987 12.5%
  • 1988 9.25%
  • 1989 11.4%
  • 1990 12.37%
  • 1991 11.95%
  • 1992 13.99%
  • 1993 13.99%
  • 1994 7.49%
  • 1995 7.00%
  • 1996 6.75%
  • 1997 6.90%
  • 1998 5.85%
  • 1999 5.60%
  • 2000 6.09%
  • 2001 6.09%
  • 2002 4.70%
  • 2003 4.20%
  • 2004 3.49%
  • 2005 3.65%
  • 2006 4.86%
  • 2007 5.46%
  • 2008 5.86%
  • 2009 4.16%
  • 2010 4.02%
  • 2011 4.42%
  • 2012 4.33%
  • 2013 4.38%
  • 2014 4.2%
  • 2015 4.05%
  • 2016 3.61%
  • 2017 3.44%
  • 2018 3.21%
  • 2019 3.02%
  • 2020 2.92%
Let's call a spade a spade. 6% is not by any means massive and 15 years ago even less so.
 
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I see David Hall is now criticising our Dear Leader Burgess on LinkedIn. Typical populist stuff.
 
“Life Loans are the greatest form of elder abuse”

This, in a country where old people were being strapped to radiators in nursing homes.

This horse manure needs to be challenged. The overriding issue is greedy idiot children who can’t wait to get their hands on their inheritance. They can’t make their own way in the world and need to inherit money. Their preference would be to see their parents freeze or fall down the stairs instead of taking a Life Loan out and upgrading their home.

That the real scandal: the greed and idiocy of lazy children who want handouts.
 
Bronte said:
  • 2006 4.86%
  • 2007 5.46%
  • 2008 5.86%
Click to expand...
What that misses is the fact that these rates were FIXED for 15 years.

For comparison, I've included the 10 year fixed rate mortgages available from BOI at the time:
April 2004: 5.35% (20 year rate was 6.5%).
LifeLoan 15 year rate was 6.25%

Unfortunately I can't seem to find many other historic rates.
 
The show has been picked up on extra.ie. I am not sure what extra.ie is.

It reports on Wednesday's programme so they don't cover my rebuttal.

But here is the bit I found most interesting:

A Bank of Ireland statement to extra.ie

‘Lifeloan was set up on a 15 year fixed rate and at the end of the 15 year fixed period the product rolls to a variable rate (currently 3%). Customers can pay off the loan early if they wish, and many have done this.’

So, I was right all along, although two of the callers told me I was wrong.

Brendan
 
I fixed our mortgage for 5 years back in the for day 9.5% and?

I broke out of it, paid my penalty and moved institution.

Knew what I was doing, understood mortgage, interest rates, fixed variable. Have you a point?

Red onion can you tell me what exactly your post means. What exact interest rate are you saying the bank should have charged.
 
Bronte said:
Have you a point?

Red onion can you tell me what exactly your post means. What exact interest rate are you saying the bank should have charged.
Click to expand...
Yes... The rate on this product was consistent with the term rates for fixed rate mortgages at the time.

Your point was that the rates weren't high. I'm just agreeing with you, but going further and saying not only were they not high, but they were possibly close to normal interest rates. There's no point comparing it to variable rates.
 
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I think David Hall’s reference to you as “Burgess” on LinkedIn is very disrespectful.

I’m not sure what his game is. He was involved with the Make A Wish Foundation and I was at a table at a ball with him once and he seemed okay. He owns a private ambulance company. Then he springs up as an advocate for mortgage holders. I always assumed it was a grift to get ownership of the borrowers’ properties.

But there’s a way to carry one’s self and his appearance on Liveline and its aftermath aren’t it.
 

Bank of Ireland were invited to forward a spokesperson and they declined. The bank is entitled to decline, but it is not fair to say "mistruths and FUD, largely unchallenged by the presenter."

I note on Brendan's post above that Bank of Ireland made a statement to www.extra.ie (not a great source of news unless you are interested in the daily chores of supermodels) and I see no reason why they couldn't challenge any of the subjects on Liveline.
 
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