David answers questions on Galway Bay FM – 24th May, 2012

 QUESTION:  I placed 100k in an Evergreen Fund with New Ireland in 2007. I find now that the value has dropped considerably and I am wondering what your opinion is with regards to this Fund?  ANSWER:  It is unclear from your question as to whether or not you have a capital guarantee on this Fund.  If there is a guarantee then you will receive at least your original investment back at the maturity date.  If however you do not have this guarantee then it is important to review the performance of this fund every 3 months.  I would suggest that if it comes anywhere close to the original investment sum, that you should consider encashing same as it obvious from your question you are not a risk-orientated investor. 


QUESTION:  I have a small business and the bank are renewing a loan facility that I have.  They are going to increase the interest rate on this loan by 2½ % per annum.  I feel that I am being victimized and I am wondering are there others out there who are having a similar problem? ANSWER:  Well the good news is that you are not being victimized and the bad news unfortunately is that all of the banks are reviewing their loan book and looking to see where they can increase interest rates.  It is obvious that your facility is up for renewal.  Unlike the boom times, there is now immobility in moving loans from one institution to another to obtain a better rate.  Therefore the current situation is like “shooting fish in a barrel” from the banks point of view.  There is very little you can do other than try to get the bank to see some rationale with regard to the rate on your loan. 

QUESTION:  I have a mortgage on an investment property and the repayments are up to date.  Recently I inherited a sum of money, which I put on deposit with the same bank.  They have now put pressure on me to reduce the amount owed on my loan, despite the fact that I have met all the repayments.  What is your opinion?  ANSWER:   I am assuming that you are up to date and have not breached the terms of the original loan of offer.  If this is the case, then the bank cannot force you to utilize some of the money that you inherited to reduce the loan.  All banks have a very definite agenda here where they are looking to put pressure on borrowers to reduce their indebtedness to them and they are using whatever means they can to do this.   However, you have a contractual arrangement with the bank on this loan and therefore they cannot pressurize you to change the terms of it.  I would advise that you resist the banks pressure at all costs.