Joanna Tuffy (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance if those with equity release loans (details supplied) have been taken into account by him in his plans to help those with large debts; and if he will make a statement on the matter. [37717/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Equity Release Loan in question was available from February 2001 to November 2010. It provided long term equity release for people over the age of 65. It was a way of unlocking part of the value of your property, without having to move home. The amount a customer could borrow depended primarily on their age and the value of the property in question. No repayments are required on the loan until one of the following events occur:

1. The property is sold

2. The death of the borrower (In joint cases, the last surviving borrower)

3. The property is vacated for six months or more (In joint cases, by the last surviving borrower).

As the maximum loan to value available was 30% of the house value, the incidence of potential negative equity in these cases is not material. Notwithstanding this, where a repayment event occurs, the Bank’s recourse is limited to the market value of the property at the point of sale. The borrower or their estate has no liability for any potential shortfall following sale. I have been informed that as no payments are required during the term of the loan, by definition it cannot accrue arrears and as a result the product does not fall within the scope of the Bank’s MARS strategies.