My grandad completely forgot he took out a lifetime mortgage

I'm sorry your grandad is so upset but not sure what you mean by recourse?

If he took it out when he had capacity then he was fully aware of what it meant and should have read the terms of the agreement. Plus, he would have been getting letters annually about it- what happened to those??

I dont think saying he forgot will do anything unless it can be proven he had dementia when it was taken out otherwise everyone could say that!

You cant argue that older people shouldn't be allowed to release equity as thats hardly fair on those who need it and have fulll capacity to make their own financial decisions.

Ah, thanks, PaminaMozrt; foolishly I missed that bit, and though it seems a bit at odds with the comment that he's of sound mind I'm pretty confident this will be a common thing when families "find out" about the arrangement made

I doubt it'll wash with the equity release company, who reasonably enough will have looked after their own interests, but like others I wonder if there's more to this which OP hasn't been told

Edited to mention that you updated while I was typing, @hobbitum, so sorry for missing it. I guess that if he spent it on a car or holiday - in other words something to enjoy personally - at least that's better than if he'd somehow been cheated out of it

Hmm @Almostwelsh maybe yes compound interest required. No wonder people get in a mess!

If he's 90 it was quite possibly a relatively modest amount 30 years ago, it's really not so crazy that he doesn't remember unfortunately. Quite possibly a high interest rate if it was a long time ago, I don't think they tend to track the base rate, it's fixed for the term (open to correction on that).

Sorry this has happened to him. If it were me I would be concerned that someone has persuaded him to take it out and taken the money. I have experience of this happening in my own family.

Are you worried your inheritance has gone. He must have known what he was doing at the time.

Have you checked his bank statements that he did indeed see the lump sum and this wasn’t a fraudulent application in his name?

Its strange for him to not have a clue if he’s of sound mind.

You're right I think. I just did a quick calculation in my head and paying back 50 when you borrowed 40 is 25% and then there are 5 sets of 10 weeks in a year, so something over 125, as there is an additional 2 weeks I couldn't be bothered to work into the calculation!
But - if the loan were to continue past 12 weeks the APR would be very much more wouldn't it, as the interest would be mounting up further!

It sounds like equity release. He should have oaud interest I'm guessing, but hasn't. I'd get PoA abd ask the new company to give me all the paperwork (Subject access request).

Then focus on reassuring him that it doesn’t matter to you if you inherit nothing and you are happy he had some money to enjoy at the time he needed it.

I was thinking, there's no way I'd sign myself up for any of that work. Wouldn't be acting as executor. Let it all be the bank's problem.

I think just tell him you have got it in hand, you will seek any redress possible but that at the end of the day it's only money and his health is more important.
I'm sorry for the stress this must be for you OP, and even though it's only money, money can make a big difference and I am sorry that you won't now get what he hoped to leave to you, maybe because he stuck his head in the sand, or wasn't on top of things, or maybe because the system is deliberately stacked against the borrower. It is what it is, can't change that now. See where you stand and go from there.

Like you say, it’s ‘his own awful mistake’. If they can’t take anything from him until he dies then there is no problem - except for anyone hoping for inheritance.

@Puzzledandpissedoff - I think OP e explained that her grandfather* *cannot remember what the money was spent on.

Ahh bless your grandad, sounds like a bit of old age related memory decline. Or it could be the onset of dementia clouding his memory, either way, it sounds like equity release. My dad took out an equity release from his home a few years ago. He was self employed and off sick with cancer recovering from surgery, he also had something neurological developing in the background and knew ultimately he was declining cognitively. There was still mortgage outstanding and he needed a few short term home adaptations he couldn’t afford. He took out the equity release lump sum, paid off the mortgage, paid for the short-term necessary home adaptations and then 18 months later had to move into a care home. His property was sold to fund this, the first people paid back were equity release, then anything left was his to fund his care. The way it works is on compound interest so the interest on the original amount increases rapidly. If your grandad has had this for a significant time period it will have eaten up much of his home equity. The new rules, not sure when the legislation came in, are that you cannot have negative equity on an equity release, so even if the amount owed increases over and above the value of the house, the estate pays nothing further and the equity release company cut their extra losses and just sell the house. You will need to check if this is indeed equity release if the negative equity rule applies- let’s hope it does. All the best ❤️

He borrowed a relatively small amount, now gone and certainly not invested. It is the interest and repayments accrued that is now so much more debt

@hobbitum I thought there was a thing now where they couldn't claim back more than the house is worth?

Also some schemes don't require monthly payments at all; they pay out then recoup their money when the house is sold

Lastly, you've not answered the key question so many have asked: even if a modest amount he'll have received some sort of payout, and you say he's of sound mind ... so what's it been spent on?

15k not 150k

I think a lot of older people don't fully understand the long-term implications of it. They think: I get £15,000 now and then when I die they'll take £15,000 + a bit of interest.

They don't realise that that bit of interest is going to grow to huge proportions, particularly if they live another 20-30+ years.

And I can understand your Grandfather not looking at his statements very closely if you think of it as a loan you don't have to do anything with or have much influence over. I never look at my student loan statement closely and have no idea of how much that has grown with interest, because I know I have essentially no control over it (unless I overpaid which isn't recommended) and it will be written off in future.

These companies get a really bad rep, but their interest charges are not usually huge, they are in line with any other interest on borrowing and if they have given someone $150K then they have every right to charge interest much like every other lender on every other type of money borrowed. The problem is people don't understand how they work and expect the lender to just give $150K out against the value of a home and expect them to realise that money back in 10/20 or even 30 years time without anything in it for them....

This is what I would do:
Reassure him as best you can.
Persuade him to give you power of attorney.
Find out as much as you can about the scheme.
Maybe post a factual query on the Moneysavingexpert forum.
Consult with CAB about the best way forward.
And keep on reassuring him.

Come on. You want to be shitty to OP, do it straight up not sly like this.

That's not how lifetime mortgages work. They are a fixed amount of interest on the amount you borrow whilst you are in the property and then the amount you have borrowed is taken from the sale of the house when you die. They are actually quite a good idea for releasing some value in your home.

So you have a house worth $500K and want to release some of it's value, the company give you $100K and you pay interest on that $100K at a fixed charge of say 4% until you die. This is no different from any other mortgage. When you die the company takes the original $100K from the sale of your home.

If he hasn't been paying the 4% interest every month then that may be getting added to his overall loan of $100K.