Posted online: Jun 26th, 2009

HOMEOWNERS in Letterkenny who are being forced to pay interest rates in excess of 10 per cent to Donegal County Council are “being screwed” according to Donegal Senator Pearse Doherty.
The Senator raised the matter in the Seanad this week but was told that these loans were issued in a different economic situation and that refinancing was not a viable option.
The Senator told the Post that some customers could be paying in excess of €42,000 for a €17,000 loan as a result of fixed rates and terms that were previously in place.
“What happened is that we have 242 customers with Donegal County Council that are being charged in excess of 10 per cent,” the Senator said.
“Prior to 1991, if you took out a loan you had to take it for 25 to 30 years. These people are really being screwed.”
He pointed out that the council currently has 973 customers but that new customers would only be required to pay interest rates of 2.25 per cent if they applied for a loan today.
Customers have the option to refinance their loan with a main street lender without being penalised by the council however not everyone can avail of this option.
Senator Doherty explained that a condition of the original loan was that customer had to be unable to obtain a private loan and that some people were still in this situation.
“It’s Catch 22 here for some customers. The offer is there but they can’t take it up.”
He called on the government to introduce legislation to allow local authorities to let customers refinance these older loans.
“It’s not going to cost the government any extra money. The council are already allowing to you go to a private institution and they are willing to take a hit. What they’re not willing to do is refinance it through the council.”