family first from the EBS

F

flash

Guest
Is this unfair pressure to be putting on parents ???

I believe is encouraging children to request that the family home be mortgaged to provide a deposit/help for children to buy their own homes


am i right anyone ?
 
Relevant link is [broken link removed].

I'm inclined to agree with flash. If, as a parent you are in a financial position and of a mind to help your children get on the property ladder, that of course is up to you. But if you're not, on either count, I don't think there should be any pressure brought to bear on you.

Still, if you've resisted "pester power" until this point, you should be well-versed in the lines "NO darling - just because your best friend's parents gave him/her a Barbie Doll / Action Man / Playstation 2 / deposit for a house, doesn't mean to say we're going to" :lol

Liam D Ferguson
www.ferga.com
 
Family First

Of course, sometimes it better to do something for your kids while you are still living as opposed to passing on assets while permanently in the arms of Morpheus.

Think of the satisfaction you could derive from the former.
 
Re: Family First

I couldn't agree more, but it must remain your choice to do so, not made under pressure from your kids or a clevermarketing campaign.
 
Re: Family First

Heard the ad on the radio the other day and then saw the TV version and thought that they were awful. However having it debated on national radio (e.g. Marian Finucane) was a bit OTT in my opinion. It amazes me how some people seem to feel so threatened by/vulnerable to advertising messages that they don't like....!
 
Has the Central Bank a view on this?

This is about making money for the EBS. The Central Bank is keeping a close eye on the Financial institutions. They are not allowed to overlend to their customers. In addition to quoting the normal rate of interest on homeloans they are also obliged to quote up to 2 percentage points to see if this is affordable to the borrowers. Most borrowers will argue that they can well afford to borrow well over the 2.5 times income threshold. So what the EBS is doing is really encouraging the parents to borrow the extra that they are not allowed to lend to the son/daughter. The parents then enter into an arrangement wherby the son/daughter repays the parent and the parent repays the EBS. This is simply a mechanisim to lend more money to the borrower through the back door and circumvent Central Bank borrowing guidelines. It is nothing about the warm family mutual type concept.
 
Re: Family First

The scheme is a recipe for disaster. We hear every day that pensions are underfunded and that people will get nasty financial surprises when they retire. Now they are being encouraged to borrow to support their children in buying property of their own - presumably the kids will be mortgaged to the hilt themselves as well. Most of the people in this situation will be over 55. Doesn't add up, when one takes into account actuarial rates of unanticipated incapacity to earn, illness and, sadly, unexpected death in this age group.
 
EBS family first

What if you need the certainty of the equity in the family home to support your future medical or nursing home costs - a big worry for lot of couple?

Many children are not able through financial, work(2 working through necessity) , actual room , commitments or other reasons to take in ailing parent or parents, especially one parent families?

In many cases the equity in their family home is all they have and the end.

Its not a matter of just saying NO! and having the children again blame the parents for something(them not having house of theirt own) it goes far beyond that.

I believe it does put pressure on parents who can't.

FF
 
"Ah Da I'll pay you back next month"

Everyone is assuming that the parent is making a gift of their new borrowings to their child. Supposing the parent is not making a gift but lending the money to their child, that has to be repaid.

We now have a situation where the child has borrowed the maximum amount from the EBS or other financial institution. This has to be repaid. Including mortgage protection, fire insurance, serious illness cover etc etc
The EBS thinks it suitable that the child has borrowed enough and his/her borrowings are within Central Bank guidelines.

But it is not enough there is a shortfall. In steps the EBS
"Sure don't we have this new product"

The parents arrive in to the branch. They borrow against their own home, maybe take out new mortgage protection, refresh their fire insurance, all EBS products.

They LEND this money to their child. Now the child has to repay both the EBS or other lending institution and their parents. The EBS were happy not to lend the child anymore money but seem happy enough that the parent will lend the money to the child. Why did they not give the child the extra money themselves in the first place?

I bet you when a monthly repayment is missed by the child it will not be the EBS that will lose out. "Ah Da I'll make it up to you next month"

Does the parent sign a declaration for the EBS that this money will only be gifted to the child and not given by way of a loan?

Are there tax implications in gifting money to children?
 
Re: "Ah Da I'll pay you back next month"

Are there tax implications in gifting money to children?

Maybe - but there are generous allowances/exemptions for [broken link removed].

I hate the EBS ads with a vengeance but I don't understand people getting so worked up about it and can't see what the problem is with parents saying no to such a proposal from the children if it doesn't suit them. We are dealing with adults (parents and children) here after all.

From some of the reaction to this ad (including Marian Finucane taking the EBS representative to task over it) one would think that people lost all of their decision making faculties in the face of such a ferocious advertising onslaught! :rolleyes
 
Family First

Yes, there are tax implications in gifting money to children,but you'd have to gift an awful lot - about €450,000, if I recall - before you'd have to worry about them.

The ESB doesn't care if the parents lend the money to the children. Why should it? If the children cannot pay both loans, the ESB is protected - it has security over the children's house but the parent will have none. So, yes, the parent will be at a loss.
 
Re: Family First

I haven't seen or heard the ad, so I can't comment on it. The ad in today's Irish Times is unacceptable to me. It says that parents can borrow at no cost for the first three years, or words to that effect. This is grossly misleading. Just because they are not making repayments doesn't mean that the interest bill isn't ticking up.

Apart from the bad ads, I see very little wrong with this product.

If my parents have €30k in the bank and they give it or lend it to me to buy my first house, is there anything wrong with that? I don't think that there is.

If my parents have a €500k house and they borrow €30k on the strength of it, is there anything wrong with that? I don't think that there is. Particularly if I give them back the money with interest after 3 years or after 10 years.

A first time buyer would probably get more benefit from €30k now than from €300k in twenty years time when the parents die.

Most of us go through a financial life cycle:
Financial dependence on our parents until finished studying.
Our first job when there is a fair bit of surplus cash.
Scrimping and saving to buy a house and/or get married and/or have kids.
Getting the mortgage under some control.
Getting the kids under some financial control.
Accumulating cash before retirement.
Retiring in a mortgage free home.
Dying rich.

As long as helping the child with the mortgage doesn't endanger the parents' long term financial security, I see nothing wrong with it.

Brendan
 
Re: Family First

They borrow against their own home, maybe take out new mortgage protection, refresh their fire insurance, all EBS products.
Click to expand...

Maybe they will, but they are unlikely to be under any obligation to do so.

They should have adequate fire insurance in the first place and if the EBS offers a better quote,then they will save money.

If they are over 50, they are under no obligation to take out a mortgage protection policy.

Brendan
 
Nursing Home

Most of us go through a financial life cycle:
Click to expand...

Hi Brendan - You omitted the all too common stage of

'Spend my final 3-5 years in a very expensive nursing home costing me (or my kids, if I was nice to them) €500 per week & upwards, draining away my assets & my dignity'.
 
Re: Nursing Home

Also, if parents find it necessary to borrow say €30K at age 55 or 60 to fund their children's house, it is not a great sign of their long-term financial security, if they want to remain living in their own home.

All it takes is for the breadwinner parent to suffer a stroke or some other debilitating illness and the remaining parent may be forced against their will to sell the family home to pay off the bank, at possibly the most stressful and vulnerable time of their life.
 
EBS family first

Brendan,
ur wired 2 the moon:)

I hope to die and leave the home + to my children, at that stage I will no longer need it(if I outlive my wife)

But, up to then, lifes a gamble and I may need a large amount next week, next month, next year for who knows what emergency.

Some people may be put in a very difficult at a difficult time over this.

It should carry a health warning.

Mr EBS said that their "advisors" cover everything.

They just want to sell a product and earn commission

Remember the Pension scandals in the UK?

F
 
Re: EBS family first

I am obviously not getting my point across. As I said in the post, As long as helping the child with the mortgage doesn't endanger the parents' long term financial security, I see nothing wrong with it.

I am not suggesting taking out a mortgage for 92% of the value of the home. I think in most cases the amount borrowed would be quite small - maybe 10% of the value of the property? This is unlikely to endanger the financial security of the parents. In most cases, the child will repay this loan after a few years and everyone will be better off. If the child defaults andif the parents get hit with a sudden big billandif they cannot remortgage their home any further, the parents will be at a loss.

If the kids are not reliable or if the parents are close to nursing home stage or if they are likely to need the money in the near future, then they should not lend the money to their kids. The parents should only be lending the money to their children if the children will have the capacity to repay it in the future.

Brendan
 
Property values

I have no strong views on the family first product. If I were a parent I certainly wouldn't use it myself, but I can see that it might be useful. However, I do want to make a small point about the "parental security" issue. It is a fact that in real terms property values have jumped ahead in the past ten years. For most people, a substantial part of their wealth is tied up in their home. So the property market has - indirectly- brought about a significant redistribution of wealth, because those in larger, better houses - i.e. our parents generation - have benefited disproportionately from the rise in property values. In other words, many parents now have substantially more wealth than they expected or planned for. This doesn't place any moral obligation on parents (in my view) but where you have a parent who has benefited from the strong property market and a child who has suffered because of it, there is certainly nothing wrong with both parties redressing the imbalance, and the EBS mortgage offers a way to do it.
 
EBS

I'm a bit concerned by the fact that the TV ads display 'No Legal Fees' but when you read the small print (see below), you will find that this only applies in certain restrictive circumstances, i.e.

You may wish to use your own solicitor and EBS will
contribute up to € 900 towards the legal costs. Your solicitor will invoice your local EBS office directly. The loan amount being refinanced must be at least € 40,000 to be eligible for this legal fee contribution. In addition to refinancing your existing mortgage to EBS, you must also obtain additional finance to help towards the cost of the first time buyer’s property. This product is seen as an entire package designed to help parents contribute towards their childs’ first home.
2. The second circumstance is where the parent is an existing customer of EBS who avails of a top up loan in order to contribute to the deposit of their child’s home. The first time buyer must also take out a new mortgage with EBS. EBS will pay the legal charges associated with registering the additional top up loan proportion only. This applies only if the EBS choose to register the legal charge over the loan. This is only available provided the first time buyer also takes out a new loan with EBS. Any other legal fees associated with this product are the responsibility of the customer.
You may wish to use your own solicitor and EBS will contribute up to € 900 towards the legal costs. Your solicitor will invoice your local EBS office directly. The loan amount being refinanced must be at least € 40,000 to be eligible for this legal fee contribution. In addition to refinancing your existing mortgage to EBS, you must also obtain additional finance to help towards the cost of the first time buyer’s property. This product is seen as an entire package designed to help parents contribute towards their childs’ first home.
2. The second circumstance is where the parent is an existing customer of EBS who avails of a top up loan in order to contribute to the deposit of their child’s home. The first time buyer must also take out a new mortgage with EBS

EBS will pay the legal charges associated with registering the additional top up loan proportion only. This applies only if the EBS choose to register the legal charge over the loan. This is only available provided the first time buyer also takes out a new loan with EBS.
Any other legal fees associated with this product are the
responsibility of the customer.
Click to expand...
 
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