My grandad completely forgot he took out a lifetime mortgage

Yes but they tell you what the consequences are and you sign to say you understand them. It's no different to anyone of any age taking out a loan and saying you understand the repayments - and then later on saying "but I didnt know- I dont understand the concept of interest!".

If people dont fully understand what they are signing then they shouldn't be signing stuff- they should get someone else to check it for them or give someone they trust POA. Either someone has the capacity to understand their decisions or they dont. As @Puzzledandpissedoff says, the only way around this is to ban anyone over age 65 making their own financial decisions and that is hardly fair to those who are aware of the risks - its also very patronising and infantilising to suggest that just because someone is older, they must be mentally incapable of making their own decisions.

The only caveat to the above is if they dont explain and it was legally mis-sold but if the paperwork explains it and he signed it then they havent broken the law.

Yes, and as a PP said you can do all of these things with a lifetime mortgage. Port it to a bungalow, or repay it. You don't sign anything to say you'll die in that house.

Thing is, @jessycake, whatever was thought or implied the updates on what they'd be taking would have been included on every annual statement, and it's hardly their fault if he didn't bother to read them

Since it appears there'll always be claims of "they didn't understand" no matter what's put in place, it seems all that's left would be to ban equity release completely, effectively suggesting that nobody can be trusted to take all the T&Cs on board - and I'm not sure that's very fair to the many for whom it works perfectly well

I doubt he fully understood the implications , many people can't comprehend that a small equity release would convert to the whole equity in the house. Most of the blurb shows happy pensioners on a cruise or something and loving life, he probably thought and it was possibly implied that they would take a lot lower proportion of his equity after his death , still leaving some to his relatives . If he has savings left he may be able to gift small sums or buy something sentimental to remember him by.

Well I was talking about these lifetime mortgages in general terms, not specifically the OP’s grandad.

But arguably many people in their 80s and 90s ‘start a new phase of life’ as their mobility or health declines. And it’s not uncommon for older people to want to downsize / get a bungalow / move to be closer to family.

You can use a lifetime mortgage to purchase a property. You can port a lifetime mortgage. You can repay without early repayment if the new property doesn't meet lending criteria. In terms of moving home, it's very similar to having any mortgage, except you're not obligated to make any repayments.

It's fully regulated these days and customers can't take it out without independent financial and legal advice. It's basically impossible for it to be mis-sold now, and IFAs need to be specially qualified to even register with a lender to make an application.

This isn't a requirement of all lenders. Home insurance is, but life insurance isn't.

I worked in lifetime mortgages for many years.

Contact the provider of the lifetime mortgage and tell them your concerns. They won't be able to discuss it with you, unless your grandfather gives you third party authorisation, but they will (should, if they are responsible) conduct a review of the account and look at the application to see if there is any sign the adviser did anything wrong.

Standard practice on a lifetime mortgage is to contact the customer during the application process if necessary and on/after completion to confirm. Then customers are left alone other than the annual statements, because the point of the lifetime mortgage is that the customer has the money they needed/wanted and still owns their house, the provider simply has a right to equity from the estate, or when the customer wants to pay it off they can. There's no reason to contact. Occupancy checks are carried out via the electoral role to make sure the customer is still resident and if any concerns are raised contact will be made.

Responsible advisers should encourage customers to discuss with family members so there aren't surprises or challenges later down the line. Your grandfather will have had independent financial advice and independent legal advice, as that's a regulatory requirement of the lifetime mortgage.

There should also be a no negative equity guarantee, so if the house hasn't increased in value over the years, there won't be anything to pay over and above the value of the property.

Hope that's put you a little at ease, but if you're really concerned, contact the provider.

@Gwenhwyfar my FIL is 85 and exchanging next week and has an ongoing purchase too. I think people can have equity release in their 60s and still make further changes to circumstances, but to be honest they need to be making that decision either if they are actually paying the interest- in which case it makes no difference, within 10 years of equity release if they have been paying nothing or have an absolute boat load of equity so the release is a very small portion of the equity - even with compound interest or are moving to a rental. It's a really individual thing - but definitely your options are going to be limited if you have borrowed a fair old chunk on a very modest home and been paying nothing back at all for 15 years plus.

Yes, but OP's granddad is 90. He's not starting another phase of life is he?

It's a shame that with all your wordly experience you haven't come across any situations which might lead you to consider: you know nothing about OP, her family or her finances; you don't know if the grandad has spent the last few years reassuring her that he'll 'not see her go without' due to whatever trauma/ financial difficulties may have presented; you don't know if the grandad has a strong sense of pride and an inate desire to leave money behind, so even if the OP doesn't give a shit she is mindful of his feelings and is validating his perceived needs. Maybe you could pipe down and do some reflection.

Experience. Which has resulted in cynicism.

But it doesn't just "happen."

An adult in sound mind made the decision to essentially sell their home to the bank; in exchange they got ready cash AND the right to live in the house until death.

That was a proactive choice on the part of this gentleman and many others. Ignoring statements arriving at one's home is a proactive choice.

These programs are costly for obvious reasons but they aren't scams. And most 70 year olds aren't so vulnerable as to be unable to comprehend the terms.

They have changed since they first came out. The types I enquired about don’t need insurance (I haven’t come across any that do). They calculate what percentage of the house’s value can be borrowed based upon the market value of the property and the age of the borrower. Some come with an agreement to pay the interest. Others (my preferred choice) have nothing to pay during the lifetime (although payments can be made) and there is a guarantee that the debt will never come to exceed the value of the property.

Surely he would have had to pay monthly for the insurance, and as it appears he wasn’t paying anything, wouldn’t the insurance firm have queried it, and does it also mean there is nothing to pay the remainder of the mortgage? Does that mean his relat have to make up the shortfall?

Surely you mean buildings insurance? You generally have to agree to have that in place if you have a mortgage, so that the house rebuild would be covered in the event of a fire or similar.

An older person is unlikely to be able to take out life insurance, the cost would be astronomical! The lifetime mortgage is repaid on the death when the property is sold.

No problem

Being an executor is a PITA, and I would never do it if I didn't stand to get anything, at least a fee, or the satisfaction of doing a job that benefits others in the family efficiently and carrying out your friend or loved ones wishes - not just clearing debt.

Doing it, with all the kerfuffle of selling a house, simply to pay off a mortgage and be left with nothing, just wouldn't want to go there!

You can of course resign as executor, but its better never to be in the position if there is nothing in it for you.

lasting POAs ( the modern version) are now recommended for ANYONE with any assets or cares about decisions made about their wellbeing

you write them and appoint your attorneys whilst you ARE in sound mind ( or have mental capacity as it’s now called).

only if and when you are mentally incapacitated can your attorneys apply to activate it and step in

that can happen to be anyone who is run over by a bus ( so to speak ) and is in a comma for a relatively short time, to someone sectioned under mental health act ( which can also happen to anyone ) to mental decline associated with dementia

To activate it has to be signed by doctor to say person doesnt Have mental capacity

you can also create rules in LPOA to give permission to be an attorney to B.C. act on your behalf to do CERTAIN stipulated things. So you could ask for you children to step in and help run your finances and deal with bills etc if you’re getting old or even, like my relative, asking me to pay bills and run their home when they’re out of the country living a life travelling the world in their older age. I have xx access to their current account to pay bills, do any maintenance etc needed

I have had my 2 LPOA ( one for legal finance and other for heath ) for years, since I b first had will - talking 40 years ago . I have an expression of wishes the LPOA refers to that I update as and when .

not needed to activate up till now. May never need it . But if I do it’s all ready to activate. Attorneys have copy too .

you can write your own, don’t need solicitors unless it’s complex.

everyone should have one. You don’t know w f ars round the corner at any age

With a lifetime mortgage the lender requires you to take out life insurance so that when he dies the insurance takes over the remainder of the mortgage. Maybe look for documentation of the full mortgage agreement and contact the lender.

@PinkSparklyPussyCat Yes I can see it's individual- I think under 72 though it may be wiser to bring in the % of house option based on value at the time, or that interest has to be paid - and it can be changed at 72. If necessary pay interest from amount drawn down- you didn't mention it but most people in that situation would be getting life insurance monies too come in - or should be.

I think one big problem is years ago people were drawing the odd 20k for new windows/boiler/caravan etc- So amounts were not huge but nowadays I've read people with plenty of equity drawing 100k at 60 simply because they don't want to work anymore and that will absolutely rocket if they live to 90 etc if they choose to pay nothing back.

To be honest it's their money- and I'm all for people making their old age comfortable if they can - but I think secrecy is a big thing and many children are in for a big shock if planning care home situations or even inheritances based on houses worth xyz without realising the elderly person has actually got little equity..

Surely it depends on the circumstances. DM was widowed at 67 and needed money then, not in 5 years time.

I don't know if the type of equity release she did is still available or if there are only lifetime mortgages now. She knew that, whatever happened, she would have some equity left in her home either to use for care fees or to leave in her will.

We found out my grandparents had taken out equity release when they had passed away. They had borrowed 11k in 2006, with the interest etc the repayment was £55,000 when the house was sold. The annual statements we found however did show the final sum that was to be paid back, does your grandfathers not say the same? Im not an expert but depending on how much he released it will just be paid back from his estate once he’s passed. They value the house when they ‘offer’ the equity release so have an idea on what the house will be worth and if it will cover it. As for now, he will still have his home which is the most important thing. I’m not a fan of equity release but I did read through all the paperwork and it was pretty iron clad from the companies point of view!