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Dan White: No option but to sell up after ex-wife wins 40pc share of family home

Dan answers your financial questions

I AM a man of 61. My ex-wife is forcing the sale of my current home. I have been awarded 60pc of the home and my ex-wife 40pc and wanted to know could any organisation buy my 60pc so that I could pay her off and they can have my home when I pass away. The house is worth €220,000-€240,000.

-- M0

WHAT Mo is looking for is an equity release loan. These loans are aimed at older people who have paid off all or most of their mortgages and have built up substantial equity in their homes. The idea behind an equity release loan is that the bank lends the money to the homeowner and the interest rolls up and is added to the amount of the loan rather than being paid off every month.

The loan is then paid off when the homeowner either moves out of the house permanently or dies. In many respects a home equity loan is a bit like a reverse-life insurance policy. The older you are the more the bank will be prepared to lend against your home, betting that you will die sooner and less interest will have rolled up.

Of course the reverse is also true, which is of course Mo's problem. At just 61, he can expect to live for another 20 years or more. This will be reflected in the amount he will be able to borrow against his home.

Equity release loans were all the rage during the property boom but now only two companies, Seniors Money and Bank of Ireland are still active in this market. The bad news for Mo is that Bank of Ireland product, which it calls Life Loan, is not available to people under 65, which rules him out.



PROPERTIES

The Seniors Money product, which is called Life Time Loan, is available to people aged over 60 who own their own properties. This means that Mo, just about, qualifies. However, he would receive a loan equivalent to no more than 16pc of his property. And there's another problem, Seniors Money will not lend against properties worth less than €250,000.

While the company says that it will lend against properties worth less in "exceptional circumstances", how much less than €250,000 is Mo's property actually worth? While he says that his home has a value of €220,000-€240,000, how realistic is that valuation in today's market?

Given these difficulties I suspect that, unless Mo can find some other way of getting the money to pay off his wife, he will have no choice but to sell the house.



Sold a pup by Ark Life

I WAS made redundant over two years ago and received a redundancy package. I invested over €20,000 of the amount I received in an AIB managed fund (Ark Life). If AIB is taken over by the State how safe is my money? The fund is now worth only €15,000. Should I cut my losses, which I can do? I am 59 years of age and have worked since I was 14.

-- CARMEL

READING this letter makes me extremely angry.

Who on earth advised Carmel to invest her redundancy money in an inherently risky product like a managed fund?

Was it some commission-hungry Ark Life salesman?

A managed fund was a totally unsuitable product for someone like Carmel in her late 50s.

She should have been encouraged to put her money into a low-risk product, such as savings bonds or certificates where her principal was safe and which would produce a steady risk-free income.



LOSSES

She should certainly pull out her money and if AIB don't refund her losses for selling her a totally unsuitable product, Carmel should make a formal complaint to the Financial Ombudsman.

The only good news is that Ark Life is now a subsidiary of British insurance giant Aviva and that her, remaining, money can now be regarded as perfectly safe.


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