Unsecured Personal Loans with No / High Upper Age Limit

Suzy_M

Does anyone know of any "pensioner friendly" unsecured loans with no / high upper age limit?

The circumstances are:-
Seventy-six year old relatives are embarking on a few home improvements. They would like to get the work done sooner rather than later but would need a lump sum to do this. They worked out it would be cheaper, or at most nil cost to them depending on loan APR, to keep their Cash ISA's intact and take out a loan to cover the improvement costs.

They are looking for a loan of £10K over three to four years to keep the monthly repayments easly managebale but in all probability the loan will be repaid much earlier. (I think the real reason for the home improvements is to tidy the house up ready for selling.)

They own their house outright and do not want anything secured against it (again probably because they are selling?) so are not interested in secured loans, equity release etc. Also the amount they require even at a very conservative house valuation is lot less than a piddling (his words not mine) 0.25% of the property value.

They've found lots of apparently good deals online with the main lenders but have now come up against age barriers and call centre staff seem unable to give definitive answers. They'll probably resort to contacting head offices direct next week but in the meantime can anyone suggest any more pensioner friendly deals?

Thanks in advance for any suggestions.

jonesMUFCforever

To be blunt
A seventy -six year is more likely to die before repaying a 5 year loan than a 36 year old. The cost of insuring a 76 year old would be too expensive.
As personal loans are unsecured the bank would have to take the loss if the estate of the deceased had not enough funds to repay the loan.


I do not understand how you or them work out that borrowing £10k will be
'worked out it would be cheaper, or at most nil cost to them depending on loan APR, to keep their Cash ISA's intact'.??

Dylanwing

As always (?) I totally agree with EJ, I had similar with my Mother who was 'only' 74, and the advice was to use savings if possible. There were lenders that would consider a secured loan, but it was expensive simply because of the practicalities, not least the problems if long-term care becomes an issue. The other thought is whether the improvements would actually add £10K+ to the sale price.

Suzy_M

I can certainly understand the reluctance of the banks etc to lend money to the "elderly". But as with a lot of things to do with aging, institutions do tend to take a stereotypical view.

Insurance elsewhere would cover the loan in the event of either or both of them dying even though there's more than enough funds in the estate to cover the loan. - And to be honest I think they are looking at repaying the loan within 12 months of taking it out anyway.

Re: cheaper to take a loan than use savings.
They are both retired professionals but a couple of us have checked their calculations anyway (oh dear have we stereotyped them as doddery old dears:eek: ):
Compound interest on the £9,000 ISA account they want to preserve with no withdrawals @ 5% interest over 4 years works out at £1,939.56 and £2,191.75 @ the current 5.6% interest.
Total interest payable on a £10,000 loan over the same period is £1383.20 @ 6.5% fixed and £1,718.24 @ 8% fixed.

The very least the £10k will do is make the house easier to sell but given their planned improvements they should add about 10% to the property value (without getting into a discussion of where property prices are going). - And their attitude is very much that they have worked for their property and they are not going to let it go for peanuts - even at this late stage in their lives.

CLAPTON

firstly why ever are they saving at such a low rate for their ISA? 5.6 % is low nowadays.

secondly the interest calculations are incorrect... you are comparing a fixed 9k savings at 5.6% over 4 years , with a regular payment situation.. i.e. a reducing balance.

you need to compare like for like to make a valid comparison.

10k loan at 6.5% over 4 years will cost 237 per month

so you need to compare on a like for like basis

a. paying out with the ISA losing 2,191 in interest but SAVING the 237 per month in a savings account which will earn interest (you work it out)

with

b. spending 237 per month but retaining the ISA interest

you will find they are losing money by taking out a loan..trust the APRs / AERs and you wont go wrong.

Suzy_M

Apparently 5.6% is their lowest paying ISA account - and the one they'll be using if they decide to use savings. - They've already moved the others around for better rates.

Bear in mind what they are really looking for is a very short term loan based on their pensions income alone (they have other income) but without the high monthly repayments - hence the 4 year term. - And also preserve their tax-free savings - interest from these and other savings forming part of the "other income". In reality they will probably repay the loan within the first 12 months.

They always used to do something like this before they retired - take out a mortgage / loan for an immediate lump sum whilst preserving their savings, spend the money on whatever it was to make a profit then repay the mortgage / loan early - and they've done very nicely out of it.

(Everybody is busy speculating on what their plans are, only two of us are privy to what their first step is at the moment but have been sworn to secrecy - I just hope they're not moneysavingexpert forum regulars!)

Dylanwing

I don't think we are srereo-typing, or at least not much. It may be worth trying one of the on-line loan searches such as Moneysupermarket.com and seeing what is available. The Banks will be naturally cautious because of the age & risk factor - Not wishing to be pessemistic, but some of my worst experiences whilst working in the Financial sector was in dealing with Estates. It was quite amazing the accusations that could be levelled at Banks by 'concerned relatives'.
Obviously that was a minority of cases, but it did make you very cautious of lending to seniors.

jamesd

Give Ruffler Bank a call and consider moving the cash ISAs to their cash ISA paying 6.4% and using that to secure a loan. Their normal property finance business starts at 50,000 loan size but given the complete absence of risk where they also have deposits to cover the loan they may go for it, particularly if the total value of the ISA deposits is many tens of thousands.

Taking the money out of the cash ISA and repaying it with the annual allowances or borrowing the money from relatives and repaying with interest are a couple of other options. An overdraft of their own is another option.

regularsaver1

The bank I work for do loans for people in retirement, as long as their retirement income is sufficient to repay the loan and outgoings. So most important thing would be affordability and credit score

They would not get insurance as the loan would have to finish by the age of 65, which they are obviously not, so they would be ineligible

Not being rude, but sometimes we see posts on MSEsaying a bank was ageist for not giving the loan, but then relatives say a bank mis-sold a loan to a 67 year old (just simply because of their age) when it was not the case. I think everyone just wants to be careful.