Banks rejected couple before €169,000 loan
Published 18/10/2010 | 05:00
A COUPLE succeeded in getting €169,000 from a lender after four main banks turned them away.
Patricia Burnett and her husband John were thrown into the media spotlight this week when GE Money was granted a High Court order to repossess their house in Co Tipperary.
The grandparents now say they should have listened to the mainstream banks and not gone further to secure the loan.
The massive refinancing package was worth more than three times what they originally paid for their home. The Burnetts paid just IR£40,000 (€50,800) cash for their house in south Tipperary in 2000.
GE Money said repossessing any of their clients' homes was always a "regrettable last resort".
However, the couple are surprisingly relieved at the repossession as it has cleared the way for them to apply for council housing. They said they would have preferred to sell the property and pay off their debts -- but not a single offer was made to them during the two years their house was on the market.
They took the 'for sale' sign down this week.
Similar properties in the area where the family live -- between Cahir and Bansha -- go for €130,000-€150,000. But nothing is selling since the property crash.
The problems started for the Burnetts when their kitchens' business accumulated a debt of €80,000. "We decided to use the house as collateral," said Patricia.
"I owned another business in fitness a few years later and I needed money. I went to all of the main banks and asked them to help out. We wanted €169,000."
Patricia said she approached AIB, Ulster Bank, Permanent TSB and First Active. All four banks refused her application for finance "without an explanation".
The Burnetts claimed they were told they could go back to "mainstream banking" within "a year or two" and were initially offered a "very reasonable rate" from GE Money.
However, their main source of income -- John's job as a truck driver -- was cut when his company laid him off in December 2007. He had been earning up to €1,000 a week which went towards the loan repayments to GE Money of €1,800 a month.
"It was a shock to the system when he lost his job. Within a month we missed our first mortgage repayment," she said.
The Burnetts said they put GE Money on notice and asked them to activate their mortgage protection, which covered their loan repayments for 12 months.
Once this plan ran out the couple agreed to repay the lender what they could afford -- €100 a week. But Patricia said there were "constant phone calls" from the company.
Patricia asked GE Money about other options such as repaying the loan over a longer term -- but this would have cost from €375,000 to €400,000.
Patricia has been "in and out of hospital" for the past few years and suffered enormous stress over the €32,000 arrears on her mortgage.
"We're packing up now, GE take possession on December 6. I'm afraid they'll be after us forever more. If they sell the house for €100,000, I'm worried they'll come after us for the rest. And the interest just keeps going up and up."
Patricia has sought advice on her rights to local authority housing. The grandmother said she was told she would only be entitled to apply for rent allowance or a council house once her home had been repossessed.
She said: "Never use your house as collateral is what I know now. We should never have done that."
A statement from GE Money said the lender did not comment on individual cases.
It added: "GE Money is fully committed to working closely with customers to help them find solutions to financial issues.
"Court action will always be a regrettable last resort."