ptsb proposes interest only PIA for 59 and 50 year old couple

[Brendan Burgess]

Mortgage extended until wife is 115 in debt deal that saves family home from repossession

A couple’s mortgage has been extended until one of them is aged 115 and the other 106 under an “unusual” personal insolvency arrangement (PIA) which will allow them to save their family home from repossession.

www.independent.ie

This is effectively an interest-only deal and is the right solution.

I had not heard these comments from Ed Sibley

Earlier this month the Central Bank warned that people aged 60 and over make up a quarter of those in long-term mortgage arrears, leaving them at risk of losing their homes unless lenders come up with more “extensive or ambitious” ways to restructure their loans.

They are just doing what I have been suggesting for years.

I presume the Court's approval in this case was only a matter of form? It does not appear to have been disputed by anyone.

Brendan

 

[NoRegretsCoyote]

The Co Limerick couple, a woman aged 59 and a man aged 50, owe €284,000 but could no longer afford repayments as the wife has to act as a carer for her husband, who is an invalid. Both are living on social welfare.

Under the PIA, the couple’s monthly repayments for the first year will be €357 and will rise to €644 for the remainder of the term.

Looks like an interest rate of 2.5%. Would this be fixed or variable?


Otherwise I agree this makes sense. A forced sale in these circumstances would leave them with a low income and a housing need and it makes more sense to let them live where they are for life.

 

[blanketyblank]

But what happens in the end? If they pay interest only they never own it

 

[Brendan Burgess]

They die and their Executor sells the house and repays the mortgage.

People who rent houses never own them.

Brendan

 

[ClubMan]

But what happens in the end? If they pay interest only they never own it

From the article/court report:

While it is highly unlikely the couple will live until the end of the mortgage term, their debts could end up being fully repaid as both have life assurance policies.

So it may be that these policies would clear the mortgage and the house could go to their next of kin rather than having to be sold to clear the mortgage?

Also - it's not clear that it is actually an interest only arrangment (unless somebody has crunched the numbers to reverse engineer that info?) and not an interest and (part?) capital arrangement?

This bit didn't make sense to me - why the lower repayments for the first year? Unless THAT is interest only and from year 2 onwards is interest and (part?) capital?

Under the PIA, the couple’s monthly repayments for the first year will be €357 and will rise to €644 for the remainder of the term.

 

[MrEarl]

I wonder how long this case dragged on, before they finally came up with this solution?

This is a fairly simple and straight forward solution, that should probably be rolled out for quite a few people over 60yrs of age, in similar situations.

Funds are cheap at present, so it would be relatively easy to agree to apply a fixed rate, or cap on the interest rate, enabling the future cost to be limited, for the borrower.

Once the exercise is completed, the loan can be reclassified, hence reducing the amount of capital the bank needs to put aside for it, and when you repeat for each loan, it notably reduces the level of funds the Bank has tied up, and justifies lowering lending rates.

Put a portfolio of these interest only loans togeather, and sell them off, if the Bank doesn't want to hold them.

Looks like a win for everyone.