My grandad completely forgot he took out a lifetime mortgage

This really. Equity Release is set up so that the borrower never loses their home, it’s a built in guarantee. Traditionally you don’t make repayments of any kind, including paying off the interest. It’s designed for people to be able to utilise/enjoy the equity in their home whilst ensuring they stay in it until they die, at which point the lender is paid back whatever is owing with any remainder going to the borrower’s estate. The only downside is less money to leave to whomever is left to inherit. So he just needs to be reassured that that doesn’t matter, and that his happiness is all that counts, no one needs his money after he’s gone.

The interest is compounded over time so if he took it out younger but has lived until 90, that's where the problem lies. Lifetime mortgages can be the solution for many older people who have equity but are cash poor, but you need to understand how they work to decide if it's right for you

If someone's one aim is to leave their property to their family they don't do equity release. Clearly that wasn't this gentleman's priority. That's ok. For some people the aim is to work enough to live comfortably until death and to die owning nothing.

Nothing the OP has posted amounts to evidence that this was missold.

As someone who has dealt with lots of wills and probate situations my only suggestion would be that if he wants to minimise the impact on OP that he gifts her any chattels he may want her to have now, in writing (assuming these have no great financial value / sentimental) and then either re-makes his will appointing someone other than OP as executor or destroys it altogether leaving him intestate. That way at least he can rest assured that OP will have any sentimental items and not have to deal with all the post death executor stuff just to pay off the loan.

Well maybe Mumsnet isn't for you as we only ever get OP's version of events and if you automatically disbelieve the OP due to your life experience and innate cynicism, there is no point in you posting as you are providing neither support or advice.

@Mirabai at no point did I say I sold these products.
If you must know my role was to speak to customers, AFTER, they had said they had gotten IFA and confirmed that they understood the product.
For some, after discussing with myself or colleagues concluded it wasn't for them but there were far many more who were happy to go ahead, knowing exactly what the implications were. If at a later stage their children decided they were unhappy that they weren't getting the money they expected that is a family matter. As I said previously those that weren't happy with the product seem to be the children not the actual customer, who got the cash they wanted without having to pay a penny of it back whilst living in their house.
This product worked for many customers, as has been proven on this thread.

This thread is very educational!

Edit. Failed to RTFF before posting. Ignore.

If this had happened to my DF, he would have been devastated and no amount of reassurance would have made any difference.

It really is not a weird reaction at all. You obviously have never had a elderly close relative who worked all their life and their one aim was to leave their property to their family.

Yes, you get an illustration - the same as a normal mortgage illustration that tells you how much you'd pay if you stayed with that lender for X years on Y interest rate. People don't read them though, do they!

Perhaps it's more efficient but unlikely to be appealing to an elderly person who doesn't want to move and just needs enough money to continue to live comfortably in their home.

Even if there is negative equity, unless he has other assets it's moot. There'd be nothing to pay it from, so the lender would simply have to take the shortfall. If there is anything else, I think funeral costs would also be paid first before any outstanding debts too.

The no negative equity guarantee is mandatory now, but I don't think that was always the case. I'm afraid I don't know when it changed - the equity release council website may be useful?

Personally, I'd be telling your grandad it applies anyway, there's nothing to be gained from him stressing about an inheritance now.

So the feelz.

His home is secure. Hundreds of thousands of us live in rented, will have nothing to leave, and our homes aren't secure.
He is just fine, and should not feel any shame over it.

Ultimately I agree. Most people don’t understand what compound interest is.

I’m sorry but it is true, I have personally seen many such cases, spoken at length with the heads of a couple of biggest equity release advisors in the country, and read about other similar cases - the Times did a good series on the issue a few years ago. You can also read old cases on the FOS website.

At no point did I say the customers were not of sound mind at the time. Being of sound mind and really understanding a complicated financial product and the concept of compound interest is not the same thing.

Of course you want to believe all is well if you were selling the product. (Although given dementia tends to start 10-15 years before diagnosis it’s not as easy to say as it may seem.) The fact is for reasons that is not entirely clear, elderly people don’t always understand the implications of what they are setting up, even those who are relatively well educated, even those who have had the contract explained.

Talking to an IFA is not as significant as you imply. They are selling the product on commission. As I have said the regulations were changed around 2008 and now each clause of the contract has to be explained, but even so people are still falling though the cracks. They’re old, they’re vulnerable, they think can’t access money any other way without selling, and the advisor assures them this is the best option. It seems like a good idea until the interest roll up eats their money and the statements reveal the harsh reality of their choice.

https://www.fca.org.uk/news/press-releases/firms-must-do-more-ensure-they-are-always-giving-appropriate-equity-release-advice-fca-review-finds

three significant areas of concern which the FCA says increases the risk of harm to consumers:

• Advice given by firms did not always sufficiently take into account consumers’ personal circumstances;
• Consumers reasons for looking at equity release were not always challenged by firms;
• Firms weren’t always able to evidence that their advice was suitable.

Life experience and some innate cynicism about people in general.

I disagree. I had a very dear friend who was certainly intelligent (and definitely not mentally incompetent), but he just didn't keep on top of his correspondence! He was retired (in his 60s so not that old), but wouldn't open letters as they arrived. Eventually, he would open them, panic, and bring them round to me to sort out. By that time, they were much more difficult to manage as he had left them sitting, unopened, on the side, for so long! I used to tell him off for 'ostriching' (burying his head in the sand). Some very clever people just can't manage official letters. Perhaps OP's GD was one of these people.

How so? Based on what?

Except they clearly would have preferred him to leave them his house.
The 'I'm just worried about his health' line is...unconvincing.

The fundamental problem seems to be that many (most?) people don’t understand compound interest.

Do companies that sell equity release products have to provide concrete illustrations about what will happen in different scenarios? For instance, if you borrow £30000 and live 10 years, the debt will be X, if 15 years Y, if 20 years Z, et cetera?

@AnnieSnap good for you - I think what's important is to look at all the types as there are quite a few- ones where you pay interest , ones where you pay none- and ones with a mix and match model , also ones where you effectively sell off a percentage - if you get all the financials then it's up to you both -it also can help keep a home maintained or adapted if necessary rather than let somewhere drop to bits.