Query: high rate on secure loan to pensioner

oxfordhippo

Hi,


I am helping a pensioner sort out her financial matters,


and I have found that she took out a secured repayment ( pays back part each month ) loan in 2009 for £25k with a 10year term.


The bit that alarmed me was that it was based on 14% interest.


My queries are:
(1) Is that a fair market interest rate for a £25k loan in 2009 ( secured against a house worth well over £500k ).


(2) What due diligence should Barclays have been reasonably expected to carryout before agreeing such a loan to an 89yr old?


Based on the above two not being in Barclays favour, - what is best approach to get back some ( all! ) of the vast interest she has paid so far - and ideally slap Barclays wrists for being what appears to be quiet so unprofessional?


Many thanks for any suggestions.


( the plan is to secure a sensibly 'priced' loan to clear the Barclays loan asap, but for the sake of a week or so it seemed better to have the Barclays loan 'live' if we are going to make a formal complaint to Barclays )

JuicyJesus

oxfordhippo wrote: »

My queries are:
(1) Is that a fair market interest rate for a £25k loan in 2009 ( secured against a house worth well over £500k ).

Secured loans are extremely high risk and attract a high rate of interest as a result. 14% is actually low compared to some we've seen posted on here.

They are generally last resort borrowing for the desperate.

(2) What due diligence should Barclays have been reasonably expected to carryout before agreeing such a loan to an 89yr old?

Whether the repayments are affordable and the security is suitable for the loan. There is nothing saying that an 89 year old with mental capacity cannot borrow money, or indeed is by default incapable of entering into arrangements to borrow money.

Based on the above two not being in Barclays favour, - what is best approach to get back some ( all! ) of the vast interest she has paid so far - and ideally slap Barclays wrists for being what appears to be quiet so unprofessional?

There is no right to claim back the interest. Even if you did complain and it was upheld, they would not have their "wrists slapped". The point of a complaints process is to provide redress for grievances, not to punish banks.

But going back to basics: what exactly makes you think they have been "unprofessional", by which I mean what makes you think the sale was carried out incorrectly, other than her age? It's quite possible she requested to borrow the money and the secured loan was the only option open to her, or it's something she thought was a good idea. You've given no reasons for complaint other than the rate of interest and the customer's age, the latter of which is irrelevant and the former of which is not likely to lead to a successful complaint.

This obviously changes if the sale was advised, in which case there will be a statement of demands and needs which will need to suggest that a secured loan is the best option. It also depends on who actually sold the loan - was it from Barclays directly or a broker?

( the plan is to secure a sensibly 'priced' loan to clear the Barclays loan asap, but for the sake of a week or so it seemed better to have the Barclays loan 'live' if we are going to make a formal complaint to Barclays )

What has she said about the loan then, your use of the word "we" implies that she is unhappy with this too?

iolanthe07

An 89 year old with all her faculties is assumed to be competent to sign a loan agreement as is any other adult. The interest rate is high, but not outrageously so, and it is perfectly legal. It is difficult to see your grounds for complaint, tbh.

Clive_Woody

This doesn't seem like a particularly high interest for a long term high value loan. You would also need to see the ladies credit file from 2009 to see what was on there that may have influenced the lenders rate (other debt, CCJs, missed payments, etc...).

People are living longer these days so I am not sure banks have a cut off point where they decide to stop lending to older people. I suspect if they did this could land them in a lot of trouble, but at the end of the day it is up to them to assess risk and decide if they want to lend somebody their money.

There is not really such a thing as fair market rate for loans, banks are perfectly entitled to set interests rates based on how they calculate risk for that individual, it is then up to the borrower to decide if they want to take the money at that rate.

You say that you want to find a loan to replace this one, have you started looking yet and have you been offered better rates?

opinions4u

Adult signs affordable loan agreement.

Other adult blames lender.

Is that grounds for complaint?

nomoneytoday

Would the risk of default, or delayed payment be higher for someone of that age?

iolanthe07

nomoneytoday wrote: »

Would the risk of default, or delayed payment be higher for someone of that age?

I don't think so. After all, pensioners have a guaranteed income not subject to redundancy or the vagaries of a business. If the loan is secured on property then the bank will get their money if the borrowers dies.

Nice_Weather_For_Ducks

The time to query the rate on a loan is before signing the agreement and spending the money!!

How can this possibly be grounds for a complaint.

Excuse me ombudsman, I took out a loan at 14% which I was happy with, but 5 years later I have now spent the money and think the rate is a bit high. Can you get them to lower it and refund the extra interest.

Can you see how silly this sounds?

DevCoder

This is a wind-up right?

Barclays have done nothing wrong here, the loan is secured so there is a repayment vehicle if the relative died.

jonesMUFCforever

I too think this is a wind up.

If you don't believe me please supply a link to any lender willing to lend to anyone on a secured basis over the age of 70?

The only possible way is an equity release but nothing on first post suggests this.

redcard

krisdorey wrote: »

Barclays have done nothing wrong here...

Thankfully, you don't get to make that call.