My grandad completely forgot he took out a lifetime mortgage

Perhaps make an appointment for him and you or a family member with all paperwork to discuss it. It seems strange. If he was meant to at for years and hasn’t surely they would chase it up after a few months. I get that he was “in sound mind” but the firm should have insisted that he had someone with him as these things are so complex even I would get confused.

Sounds like something my mother in law has although it was taken out by her husband who since passed away, a lifetime mortgage so no payments are required they just take their amount plus huge interest when the person dies. The amount borrowed was about £15000 and amount outstanding is now about £185000. I can’t remember when the loan was taken out but her family did not become aware until a couple of years ago aware she was widowed at which point they spoke to the loan company as mother in law says she did not know what it really was, the loan company then produced a letter signed by her in front of a solicitor stating that she understood exactly what was involved so they have everything covered. Nothing she can do unless she could afford to pay of the amount plus any exit penalty amount they will add on. Luckily she still has equity her property so she does have the option to sell up , pay them off and then buy a small retirement place.

It may have been a relatively small sum a long time ago. He may have basically forgotten where he got the money to pay for his DD's wedding/the new kitchen/the DC's housing deposit/that luxury cruise.

I suppose the risk is that the lender thinks they've 'earned' a vast sum in interest because the borrower lives for a very long time after getting the equity release and makes no capital repayments, let alone interest payments, so there's interest due on interest due on interest, etc etc. But when the borrower dies the total amount owed to the provider is more than the sale value of the house, and the law won't let them insist that's repaid out of the rest of the estate, so a lot of that interest will have to be written off.

However, given that the amount the borrower actually got in the first place will be far less than the amount owed to the lender when the borrower dies I can't feel very sorry for them.

The no repayments thing is an inherent part of the product design, so the provider wasn't doing anything unethical by not chasing payments. There weren't supposed to be any payments.

Honestly, I think he knew. He was maybe hoping the issue wouldn't need to be disclosed in his lifetime, but he knew enough to not look at all those letters. So now he feels bad because it is out in the open, but if you reassure him that you are glad he had the use of the money and it prevents the government getting it he may feel better.

You may be right that theres nothing wrong with OP being annoyed but what the hell would anyone be jealous of in this situation?
Lazy meaningless attempt at an insult

For those of you less sympathetic and saying it doesn’t matter and just to reassure him and it’ll be ok

my dad has just passed away with LBD. Around 5 years ago he had a LOT of work done to the house that his partner wanted. She put up most of the 6 figure sum of money (she wasn’t in deeds) as he didn’t have assets to do so, and they wrote a promissory note for repayment at his death.

all well and good. He was at time mentally competent and knew what he as doing, even if in very early stages maybe of his illness (only know that now looking back). work carried out put some value on the house, but not entirely got back at time . Arguably a crap investment of her money 🤷🏼‍♀️🙄

Then dad got ill very quickly. anyone who knows anything about LBD will know it’s a dementia characterised with delusions and visual hallucinations. And it preyed on his anxieties. This promissory note against his home became (in his head) a debt owed to money lenders, or the governement, or drug runners. It became 10x, 100x the amount he actually owed.

he’d paid his mortgage off on the house 25 years earlier, but as a younger man had had money debt issues. This new debt came back to haunt him. All his low esteem about managing money hit him head on.

it didn’t matter how many times we reassured him that he wouldn’t “loose” his home, that it was still there to go home to, (he was in nursing home and desperately wanted to go home), that the amount would be paid post his death and wasn’t an issues, it remained a persistent and dominating anxiety , at times an outright fear or a nightmare he couldn’t wake from. Some of the things he hallucinated about were like an x rated horror movie- what these debt collectors would do, torture etc . Vile. Really vile.

what I learnt from this is to burden old people with debt only repayable in their death is not a mere anxiety thst can be dealt with by a few reassuring words. It eats away at their inner anxieties, especially if needing to go into care for even short periods of time occurs.

Yes, OP GET him A LPOA. Immediately while he can agree readily to giving it to you if needed, it doesn’t have to be activated immediately. And yes, inform yourself about this debt. Know exactly what it that he has signed amd what will be financial consequences if he needs care home, or major work on house. Find out where money went that he has borrowed. Take advice here that it wasn’t “miss sold”, and follow through on that. If it wasn’t missold, do everything you can to explain how it will pan out after his death and if you needed to, invent a story why you don’t need his money. Anything to stop this turning into something that could haunt him.

Mortality - if the person lives forever, the loan amount plus interest will be far more than the value of the house and so they won't be repaid in full.

House prices - the loan is realised when the person dies, so if that happens during a crash (or prices just haven't risen as quickly as expected) then the loan won't be repaid in full.

Any product with guarantees (the amount paid can't exceed the value of the house) and little flexibility over timings (when the person dies the loan is due) will be risky for the provider and thus expensive for the consumer.

I think my question would be - did he forget he had borrowed this sum or did someone take advantage of him?

What is the risk to the provider?

So sorry, how awful for your Granddad and for you to discover this now.
Since he is of sound mind and presumably not normally so very forgetful, perhaps he was mis sold the mortgage. It would be worth researching whether there is some redress.

Op, please speak to an IFA. There is so much mis-information on this thread.

These mortgages are still sold now! They can be a really good option for some people.

Equity release arrangements are heavily regulated and have been for many years.

Whilst I had the specialist qualifications to arrange them it was my employer’s policy that each and every sale was signed off by our compliance dept. We had to be sure that the client had full capacity, that all other alternatives were explored and did our best to get any adult children involved if possible to avoid this type of situation.

Get hold of copies of the original documentation from the lender and see what was agreed to. You will then be able to see if there is the possibility of a mis-sale

So I think these mortgages were offered at a time where it was genuinely unforeseen what the property value would be in the future. I don’t even think you’d getting away with selling some of these mortgages any more.

You could see if you could fight it on the basis that it is not fair to the customer. There is a lot of regulation now about treating customers fairly. If a new provider has taken over it could be because the original provider wants to distance themselves from the reputational hit of being associated with these types of products.

" a very desirable property will not generate any benefit for their children who will be left with the burden of clearing and selling it, for the benefit of the bank. 65 years worth of hoarded junk."

They can just reject the inheritance.

There’s a world of difference between not having capacity and only skimming the small print. If the OP’s grandfather was of sound mind at the time he signed then it would be dishonest to play the ‘dotty old dear’ card now to claim it was mis-sold.

Such sensible advice.
Stop catastrophising Op. Reassure him. It's highly unlikely that there was anything underhand about this. Remember if you do demand paperwork and other evidence from the company your grandad will have to get involved (GDPR). I'd say just be very certain that you think something wrong has happened before making him even more stressed.

TBF there will be some people for which equity release will work well. There will be some people who will have got to enjoy spending a tax free lump sum and then ended up in a care home. They might as well have enjoyed the cash rather than watching their cash being used for care home fees.

OP, if I were you I'd get lots of facts and figures about lifetime mortgages and show him how lots of people use them. Apparently 2022 saw 6.2 BILLION pounds in total lending with equity release and 2023 there were 65,000 new plans taken out so it's not like he is the only one.

(I've taken these 'facts' from Google so not fact checked them)

I think the main problem with equity release is that the people taking them out don't fully understand what they are doing and that the terms and conditions of them are so unfavourably to the customers.

A lot of people reach middle age without having bought.
Also, a person of 90 might have children who are already pensioner age themselves.
In this case OP has already said she's the only close relative so that is all irrelevant.

This. Its certainly my the car that "nothing can be done". I would be starting off by doing a SAR (Subject Access request) for all the information they hold and the advice he was provided. It's ringjing alarm bells that he didn't know he had this and he's of sound mind. Regardless of the statements he wasn't reading, he should still have been given clear and appropriate advice at the beginning. A lot of these contracts were not sold without appropriate advice. So start there and then follow the complaints process to FOS if necessary.

I would also look through your grandfathers paperwork and see what he was given at the time. Make sure his records and the company's records line up.

Have a read of these:

www.financial-ombudsman.org.uk/consumers/complaints-can-help/mortgages/equity-release

www.clarkewillmott.com/insights/mis-sold-equity-release/