My grandad completely forgot he took out a lifetime mortgage

Surely it is not a situation you can get out of, if the contract was signed by someone of sound mind. Trying to prove otherwise would be very difficult. It’s a shame that he’s only just realised what it involved, having buried his head in the sand for so many years, but at least he enjoyed the money at the time, so that’s something!

No, it runs away with you if you stop paying the interest, as this poster did.

wow, that makes it so easy

A variant of this scenario is often the case.

However, what is sad is that in virtually all cases it is much more sensible financially to sell and downsize and release money from the sale of the property. But often the practicalities and upheaval can't be faced. But the financial cost is high.

For anyone wondering if there is any way you can say it was mis-sold or the person didn't understand what they were signing up to - further upthread I mentioned I've dealt with this for a friend of mine for whom I'm PoA. I looked into all the paperwork for his equity release and the person who visited his home who sold it to him virtually wrote out their conversation in full to demonstrate he knew exactly what he signed up to. Eg. 'So you are quite clear that you wish to not make any monthly repayments on a mortgage and you understand what that means? and 'you aren't worried about what happens to your house when you die as you don't have family to bequeath it to?' and so on. It is quite clear they discussed it, he knew what the deal was and he signed at the time. Later on, of course, he could hardly believe what the ramifications are now, but that's what happens when someone prefers not to think about such things and just wants to make life easier for themselves at that point. There was no scam, no mis-selling, but just someone who is quite naive about such things up against someone who had commission to make.

You can’t actually get power of attorney when the person loses capacity to appoint one. You’d have to get a court appointed deputyship which is much more expensive. I’d always advocate for sorting out a POA as soon as possible

Equity release is a solution to “asset rich, cash poor”.

The usual situation is as follows:-

Couple lived comfortably in nice big house on decent pension. Husband dies and takes quite a lot of the pension with him. Widow works her way through savings until these ran out. Widow is technically a millionaire but can’t afford to put the heating on. Widow has lived in house for 40 years and desperately wants to stay. Widow takes out equity release and lives her final years in the home she raised her children in with the heating on at full blast. Widow dies and family are rather disappointed to discover that they are not going to inherit a bundle after all.

(My gran took out equity release. My aunt and uncle still go on about it.)

Has he actually himself taken this thing out or someone else? Can you check the initial agreement/contract whatever with dates, signatures , sums etc

The difficult thing is that when people sign these contracts they are younger and have all their mind - they knew that repayment would be due at the end, they receive regular letters with the updated amount due.
Of course it is easy to excuse a 90y old for not fully understanding / not reading letters, but not so understandable when actually the letters started when they were in a better position and chose to let the debt grow.
At least it is good that there can’t be negative equity, this would be unfair.

OP - this is actually not uncommon to the point I think these types of mortgages should be banned.

Do you know what year it was taken out because prior to 2007/8 when the regulations were changed there was a lot of mis-selling.

Even post 2008 I think there are too many older people taking out these mortgages without really understanding what they’re getting into. The mortgage companies require a lawyer to talk people through the contracts now but I think a lot of people still don’t understand them nonetheless and it’s not clear until further down the line.

Equally some old people understand the contract at the time and then go into cognitive decline. So in some cases they may have intended to downsize and pay off the contract but they become ill and infirm and forget about the whole thing.

The only plus side is that he cannot lose his house while he’s alive.

Could you get LPA, tell your grandad you’ve fixed it… ( you wont have, but just to give him peace of mind)?

Hi op,

go and see a lawyer immediately and actually ask them how to get out of this. Noone here could tell you better than them..

Good luck 🌺

At 90 he won’t have full capacity. He won’t understand the world as it is now ( it’s very complex!).

You might think he has full capacity and he will probably tell you he has..yet he has got himself into this situation.

It’s his granddaughter why on earth should she have. Goodness. I’ve not even ‘proved’ my parents as they still have capacity. Very odd

That may or may not be fair, PetuniaT

Nobody disputes there are such salesmen, but equally there are people who'll swear blind that they "didn't understand" if there's the slightest chance of free money, even if they've signed in blood on vellum to say they do

In the end everyone has to protect themselves, and that applies just as much to the equity companies as anyone else

Yes, would agree. Many retired/widowed people took these out years ago, and maybe not realising the implications further down the line.

So much misinformation here.
equity release - also called a lifetime mortgage, can be taken without paying interest (the interest rolls up and is added to the loan to be paid on death), or you pay interest only, so the lump sum you borrowed is still payable, but no interest accrues. Most are based on a percentage of the home value. In the early days, negative equity was a possibility, but since the late 2000s, most providers give a ‘negative equity guarantee’, meaning the loan will never exceed the value on the home on death. M

Op hasn’t mentioned when he took out the policy. It’s certainly long enough ago for him to have forgotten about it.
Why the assumption that he was vulnerable?

The problem is when older people are cash poor or simply want to live beyond their income, in common with some younger people, they need to get money from somewhere and if their relatives can’t or don’t want to help and they don’t qualify for benefits or charitable grants, then they don’t have lots of options. My MIL is older than your grandad and the amount the local authority gives her for care doesn’t meet the bill. She made really good provision for old age but care is expensive (and carers underpaid for the important work they do). If you just miss out on pension credit, then you miss out on winter fuel allowance etc. Even drawing up a loan agreement so we can loan her money interest free to be paid from her estate on death means we are both expected to pay for independent legal advice. I feel you are driven towards giving money, but then you pay twice as the inheritance tax on the estate will be is higher than it should be.

Ignore the goading responses.

PoAs are useful for everybody. For instance if you get stuck abroad or in hospital. They're not just for comas and dementia, and the Attorney is expected act on instruction from the Donor if they're not incapacitated. I see OP has PoA in this case.

Some Equity Release Instruments entitled the lender to a percentage of sale value as well as interest.

Obviously you need to check the terms and an SAR would cover everything you need to know, including the possibility this was a fraudulent transaction by someone with access to GF's post.

If fraudulent, he can apply for an injunction on the Land Registry to remove the charge from the Register.

.... absolutely and by a rogue salesman preying on the vulnerable

If it was my 90 year old grandad, who wasn't on top off his affairs enough to know the deal (not reading his letters etc) I'd be very tempted to say "Don't worry Grandad I will sort it" and sheild him from the reality as far as i could without outright lies. At 90 no one is coming to evict him, so his worry will be that he's 'a failure' because he isn't leaving his house to you. I wouldn't let him end his days feeling that way. I'd heavily imply I'd fixed it and all would be well and keep my fingers crossed he didn't press me for details.