Seniors Money - A Case Study

Gordon Gekko

Registered User
Messages
5,523
My aunt and uncle needed money to renovate their home and we identified Seniors Money as a potential solution.

The company were a joy to deal with. A detailed presentation was made via Teams with all of the immediate family present. There was no hard sell. The ‘downside’ and the power of compounding were highlighted on many occasions.

The paperwork was executed in the garden.

There’s great flexibility to the product in that repayments can be made and this is what they’ll be doing (funded by their kids via a tax efficient covenant).

They took out €80k on a house that’s worth €400k.

And to the company’s credit, they wrote to the couple recently and said “we’ve reduced our fixed rate from 5.5% to 4.95%…because you joined us so recently, we’re going to reduce your fixed rate as well.”

They didn’t have to do that…Fair play.

I have been very impressed with the company and with the service (and I have no connection with them).
 
Last edited:

Brendan Burgess

Founder
Messages
44,678
Hi Gordon

That is a great account. Thanks.

When you say "repayments" can be made - are you referring to the fact that you can pay 10% of the original balance each calendar year? So that would clear the interest + some capital.

I have just seen on their website that they do variable rate loans


I wasn't aware of that. Do you know what the rate is?

Brendan
 

twofor1

Registered User
Messages
1,504
I have just seen on their website that they do variable rate loans.

I wasn't aware of that. Do you know what the rate is ?
On the homepage of the Seniors Money website it says the site is for existing customers only.

It looks like any new loans are through their retail division Spry Finance and only for the fixed rate.

Can I apply for a new loan, based on my current age and house value?​

Yes, but as we no longer have funding for variable rate loans the new loan would be a fixed rate loan. You would be required to go through a New Loan consultation process with our retail division, Spry Finance.

https://www.seniorsmoney.ie/customer-information/faqs-variable/
 
Last edited:

Gordon Gekko

Registered User
Messages
5,523
It'd be great to see a worked example of this with the product. I know we discussed it in theory, but I never worked out the exact maths on it.
See it’s not really linked to the product at all.

And there are tax pitfalls as covenants can’t directly benefit the person making the covenant.

But basically the loan is €80,000, and the couple have €28,000 of income.

Their son-in-laws are “covenanting” them a total of €8,000 a year which only costs €4,800 because of the tax relief.

They use the €8,000 to pay down 10% of the loan each year which they’re allowed do.

The loan gets cleared over time and the daughters inherit the family home debt free.

The net result is that the tax relief more or less covers the cost of the borrowings and the loan gets cleared over circa 13 years.

It’s a smart way to use the product as cheap finance for home improvements for the elderly as it’s interest only and has that flexible repayment option. A credit union would want massive monthly repayments and the interest rate could be 10%.

Yet these guys get castigated on Joe Duffy and everyone thinks credit unions are great.
 

Gordon Gekko

Registered User
Messages
5,523
Hi Gordon

That is a great account. Thanks.

When you say "repayments" can be made - are you referring to the fact that you can pay 10% of the original balance each calendar year? So that would clear the interest + some capital.

I have just seen on their website that they do variable rate loans


I wasn't aware of that. Do you know what the rate is?

Brendan
Hi Brendan,

Yes, so €8,000 can be repaid each year in their case.

And with the covenant, that’s only costing the family €4,800 a year.

So the interest cost is €3,960 in Year 1, plus a repayment of €4,800 after tax relief.

A total of €8,760.

i.e. €760 on €80,000, or 0.95%, almost like a tracker mortgage!
 
Top