Banks: Give up cigs and we’ll cut loans

SMOKERS are being encouraged to quit by the banks.

Lenders who are approached by customers looking for lower monthly repayments on their borrowing are being told that if they reduce their monthly outgoings then the bank will work out lower re-payments.

Frank Conway, managing director of financial advisors, CredyCare.ie, said that people are being encouraged to cut out cigarettes by the banks in order to reduce their monthly outgoings.

“Banks are challenging everything when it comes to expenditure,” said Mr Conway.

He also said that homeowners can negotiate a reduction in interest rates on their mortgage if they talk to their lender.

“We had a client who was able to bring down their monthly repayments by €100 because the bank reduced the interest rate on the loan for two years,” he said.

The bank agreed to review the interest rate after two years.

“People need to be very diligent and very determined, but banks are generally willing to talk,” said Mr Conway.

He also said people can negotiate in a way that there would be no interest penalties to be paid.

“Remember, the alternative for creditors is they can either write off the debts as bad debts or sell off the debts to a debt purchase or debt collection company,” he said.

“It’s a good deal for both the debtor, who reaches a new agreement with their creditor and also for the creditor, who keeps a client on board, making some payment,” he added.

Irish Brokers Association CEO, Ciaran Phelan, said he welcomes any move by the banks to assist customers in alleviating their financial difficulties, “particularly due to the fact that it was the banks’ reckless lending practices that helped spawn this avalanche of troubled mortgage holders.

“Communication is paramount for all those households experiencing financial difficulty at the moment. We cannot emphasise enough how important it is for those mortgage holders who are struggling, or unable to maintain their repayments, to either discuss their current predicament with their mortgage broker, who will liaise with the lender on their behalf, or go directly to the lender,” he said.