My grandad completely forgot he took out a lifetime mortgage

I know you don't need a reason, but I would question the motive of people doing this to get their hands on their inheritance.

This is exactly how compound interest works. It works well when you are saving and getting interest on your savings.

Conversely it works badly when you have a loan with interest.

I'm not sure, at first I wondered if the lenders had more responsibility to check in with customers and check the product was still suitable, especially of a certain age. Wishful thinking. At least his home is secure and guess we need to focus on that.

Even back as far as 2001 when MIL took her equity release/lifetime mortgage out she was required to have a face to face appointment with a solicitor by herself to make sure she was able to tell them it was her decision, she wasn't being coerced and she understood what she was taking on financially. It's just a mortgage in reverse and, if you don't pay any of the interest (which you aren't required to do), you simply end up paying more than the lowest rate. They can never recover more than the sale cost of the house (if it were to reach that point).

That actually does make sense - thanks for explaining (and to the others who've explained!).

You can make a SAR for someone else if you can prove you have the person's permission to get the information for them. When you submit a request for someone else, the organisation will ask for proof such as: written permission from the person; or. a power of attorney document

Yes, you would need their permission, otherwise you're accessing someone's private data. Also, you dont need a "reason" for a SAR, it's a legal right. You just need to ask for it and they have to give it to you

OP it doesn’t really sound like he’s forgotten, more than he didn’t really appreciate the consequences of the loan?

Many people take out this type of financial vehicle. They are advertised every afternoon on daytime tv!

The problem comes with the realisation that taking out a loan, in this way, say for a new car or a new kitchen at the age of 70 becomes a bit of a distant memory twenty years later. Some just take out equity to supplement their state pension. Others to pay off the mortgage.

The passage of time, however, can blur the fact that the money is long gone. The kitchen is now quite old, the car in the past or the £20k used to supplement a state pension has all been spent over the years. BUT the loan is very much alive and accruing significant compound interest and the property is the security against the loan.

There is quite literally no such thing as free money, apart from say a lottery win.

In fact, you are often tied into the sale of a property alongside the equity release/financial partners if money is still left in the property as they have a significant stake and can dictate the terms of the sale.

Your Grandfather may well have allowed his mind to "forget" about the initial loan money as it for him is in the distant past. But the finance company has been reminding him regularly through the issue of financial statements that he has ignored.

He didn't also choose to discuss this with his wider family (accepting you could have been far too young to be relevant.) Hence this is all news to you.

You would be paying much more than $240k interest. You will be paying interest on the interest, this is how it can spiral if you don't pay the interest on a lifetime mortgage. First year the interest is on $300k @ 4% that's $12k, so second year the interest is on $312k and so on and so on. That's how it becomes a massive number.

"Because you end up giving away your entire house for a relatively small amount of money. "

Is that really a problem though. You don't need the money to buy your next house.

Is it legal to fill an SAR on someone else's behalf when it affects your own financial interests rather than that person's?

Because you end up giving away your entire house for a relatively small amount of money. I suppose it depends if there are ways out of it, for example, whether you can pay it off at any point before it racks up too much interest.

Yep- the moment you have POA in place you can use it to manage their finances.

I got it got it when my dad was first diagnosed with early dementia but still had enough capacity to agree to it.

Also, when it came to the time of actually using it noone asked if he had given permission for it, the fact I had POA was enough to start managing his accounts.

As I understand it, for the financial POA you don’t have to wait to lose capacity to activate it. You can delegate to your attorney if you would just prefer someone else to take over the handling over your financial affairs. Obviously, grandad would have to agree.

That's Equity Release

There were no repayments to make

All he needs to find out is if there's any equity left in his house

But the money's gone somewhere...

Not particularly relevant to the thread, but it's important people understand compound interest. 4% p.a. on 300k over 20 years would be 357k in interest, not 240k.

300 x 1.04^20 - 300 = 357

The title literally says he completely forgot. I’m not saying he did or didn’t, I’m just saying that if I were her I would be making sure there’s no one else that’s had this money instead. We don’t know if there was a previously dodgy partner or other family member do we. I would certainly be getting the original documentation from the company and checking bank details and signatures.

I stand by what I said, a man of sound mind does not simply forget he’s signed his entire house over. A loan or a pension yes you forget about - this is his entire house.

This ^^ 100%.

This is how you reassure him and help him.

It's his money and his home after all.

It's a way for an older person to get maybe £10,000 to spend on a car or a cruise or a new kitchen.. which often ends up costing them £200,000+ of their assets.

It seems dodgy to me too!

I guess people would argue the older person got value from whatever they spent the £10,000 on and they only 'lost' their house when they died, so arguably it didn't affect them, only their descendants.

I can understand the shock and not understandingit but you need to put it into context. He doesnt need to be upset and you need to do an oscar worthy job of reinforcing that it doesnt matter.

Will he loose his house... no
Will he have to pay it back... no
If there isnt enough in the estate Will you be liable.. no itll be written off.

His fibal years can be comfortable and worry free if you manage to help him see that thats all that matters. Youve sad youre not worried about an inheritance (good for you) although this is the heart of the issue. Reassure him that its not important and that all that matters is his comfort now.

@hobbitum you could ask for a SAR - or fill it out on behalf of your grandad - then they have to provide you with all the data they hold on him and have sent him.

(check ICO website for more details)

Good point- seeing he was of sound mind, it’s strange he forgot that he had taken it out!

Did he take the remortgage out? Did someone else do it? Ask to see the original paperwork just to make sure, I would also question what he needed the money for as well as checking bank details of where it went

In this case, the loan provider lent £15K not £150K and the debt is now £185K. That's a lot of interest.