One nursing home resident is now taking legal advice after a bank threatened to sell her house, the Sunday Tribune has learned. The woman, who contacted Age Action Ireland but wished to remain anonymous, signed a lifetime mortgage deal. Under this scheme, the homeowner borrows at rates usually 2% to 3% above the market rate. No repayments are made; the bank reclaims the loan plus interest when the person dies and the house is sold. But if the owner moves out for more than six months, the bank can demand the house be sold to protect the value of the asset.

The woman had borrowed the money to pay for a room in a nursing home. As she left the house vacant, the bank said she had broken the agreement and the house would have to be sold. The Financial Regulator has warned that people should get legal advice before signing a deal.

The regulator says that, with lifetime mortgages, the interest on loans can accumulate quickly and frequently surpasses the value of the house. If, for example, a person borrows 150,000, after 15 years 368,354 will be owed to the bank, warns the regulator.

In home reversion schemes, the elderly person sells a share of their home to the bank but can continue to live in it until they die. But the regulator warns that because the bank has to wait to cash in on its share, the borrower will get much less than the market value of the house.

The Law Society has harshly criticised Bank of Ireland's Life Loan mortgage for insisting the borrower make a will as a condition of the loan.