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Swedish seniors face increased pressure from rogue sales people - They are warned to be cautious

Monday, 21 May 2012
In Sweden today here has emerged an impressive market for financial institutions seeking to loan their money out. These are people over 55 years who own their own homes.

Data show that one third of them has paid their mortgages off and now are debt free. This makes that part of the market attracting increasingly, a large number of operators offering so-called senior loans. As the pressure on them increases, the Swedish states enforcement agency, Kronofogden is warning them of rogue brokers.

Loans to the elderly can go by various names, such as Mortgage 60 + or senior capital, and designed in different ways.

Seven years ago, a senior loan company, Swedish Hypotekspension was created fashioned after a British model. It defines a senior loan as “a life-long loan which is debt free" says CEO Lennart Grabe.

You borrow using your home as collateral; the interest is added to the debt and is paid only when the home is eventually sold. The guarantee means that the debt, including interest imposed on, can never exceed what is eventually got out of the property.

"It is the lender who bears the, for example house prices could fall sharply, "says Grabe.
But he believes that today there is a total confusion about senior loan.
"Everything is possibly called senior loan, such as endowment policies with sometimes risky investments or loans that are interest-and amortisation free for ten years and then become regular mortgage."

The Swedish enforcement agency has noted the backsides of some types of senior loan. In its latest business intelligence, the authority writes that they have become increasingly popular debt trap for pensioners, and there are signals that suggest that the group will increase their relations with the bailiff. The property stands as security and the money is meant to supplement their retirement cash by investing in insurance, financial market conditions and such.

It can be risky if the investment fall short - the capital would have been gone but the debt remains. An increasing number of rogue brokers are offering this product,  according to the enforcement agency.
"One must also be aware that when approaching the retirement phase, they have very different incomes to relate to, "said Robert Olsson, on the Enforcement prevention.
By Team

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