Skip to main content
Normal View

Financial Services

Dáil Éireann Debate, Tuesday - 13 July 2021

Tuesday, 13 July 2021

Questions (273)

Mark Ward

Question:

273. Deputy Mark Ward asked the Minister for Finance if lifetime loans offered to senior citizens can be regulated in order that they can be capped or the recipient can have the option to pay off the loan within their lifetime; and if he will make a statement on the matter. [37576/21]

View answer

Written answers

Lifetime loans are regarded as a niche product usually provided to those aged 60 years and over. The Central Bank has advised that in addition to the requirements of the consumer protection framework that apply to the provision of mortgages generally, the Consumer Protection Code 2012 (the Code) also sets out a number of specific requirements relating to lifetime mortgages and home reversion agreements. The Code requires that, prior to offering, recommending, arranging, or providing a lifetime mortgage to a consumer, a regulated entity must inform the consumer of the consequences of purchasing a lifetime mortgage and provide information on:

- The circumstances in which the loan will have to be repaid

- Details of the applicable interest rate

- An explanation of the impact of the rolling up of interest over the duration of the loan

- An indication of the amount required to repay the loan at maturity and the effect on the existing mortgage (if any); and

- An indication of the likely early redemption costs which would be incurred if the loan was redeemed on the third and fifth anniversary of the loan and at five-yearly intervals thereafter. 

In respect of home reversion agreements, the Code requires that prior to offering, recommending, arranging or providing a home reversion agreement to a consumer, a regulated entity must inform the consumer of the consequences of entering a home reversion agreement and provide the following information:

- the circumstances in which the agreement comes to an end;

- the effect on the consumer’s existing mortgage, if any; and

- in the case of a variable-share contract, an indication of the potential change in the breakdown of the ownership of the property between that held by the home reversion company and the consumer, over the duration of the agreement.

The Code also requires that consumers are made aware of the importance of seeking independent legal advice regarding a proposed lifetime mortgage or home reversion agreement, and that certain warning statements are included in the application form, in any document relating to the loan, and on the regulated entity’s website.  

As with all mortgages, the Code also requires the provision, on an annual basis at least, of a statement of account to include the opening balance, all transactions, all interest charged, all charges, the outstanding balance, and the details of the interest applied to the account during the period covered by the statement.

Question No. 274 answered with Question No. 261.
Top
Share