To think its fine for people who took out an equity release to be held to the contract they signed

[Lemith]

Daily mail sad face story. www.dailymail.co.uk/money/mortgageshome/article-3254070/Thinking-taking-equity-release-Meet-retired-couple-pay-Aviva-135-000-spend-years-together.html

Yes having a health condition is upsetting. But they should of read what they are signing and thought about the future. I have a family member in a similar situation and they keep moaning about being done over by the bank, however it is them that through their own free will signed up to the scheme!

It looks like a lot of people thought there was free money available from their houses and are now realising that there is no such thing. I do feel sorry for them - it looks like they have been badly advised, but I think their complaint should be directed at their financial adviser rather than the company.

I imagine once the PPI reservoir has been drained, the claims companies will be moving onto equity release. That wave should finish just about in time for the pensions release mis-selling claims to start.

I don't have a lot of sympathy really, there has always been a lot of warnings about the risk of equity release schemes.

However it does seem particularly harsh that there was such a hefty fine because only one of them needed to go into residential care. I wonder how clear this clause was in the original contract.

The fee is only a fraction of the total bill. I think they are just using it as its the only angle people might feel sorry for them.

Very biased article, no photos of them on their cruiser smiling away.

I imagine once the PPI reservoir has been drained, the claims companies will be moving onto equity release. That wave should finish just about in time for the pensions release mis-selling claims to start.

Back in 1988, a friend and I (last year at Uni) looked into the idea of buying a house together. (In those days it was popular for younger people to buy a house between 4, and all get Mortgage Interest Relief As Source [MIRAS]).

We spent a couple of days in and out of estate agents. In those days estate agents could also act as mortgage brokers, and we pretty soon worked out:

1. The only game in town was Interest-Only mortages
2. Not a single salesman estate agent had ever mentioned the "you need to arrange to pay off the capital yourself" angle
3. The downside to "when it matures you can have a party" sales spiel was the fact that after 25 years you could be left not having paid the capital
4. It was never guaranteed to pay off your mortgage.

At the end, we sat down in the pub , and decided that Interest-Only mortgages were a con, a rip-off, and that anybody who believed that they would pay off their mortgage was a fool.

That was two spotty, hardly worldy wise, 22 year-olds in 1988. Ever since then I have always been doubtful about these stories of people who "didn't know". Really ? Did you really not know ?

I also have little sympathy for people who fall for the "send us your bank details and we'll transfer £10,000,000 into your account, and you can have 10%" scam.

Yup. When I was a PhD student I went into my bank to complain yet again about them fucking something up. HSBC if anyone's interested. This was about 2002.

Not only did they fail to fix it, they tried to sell me a mortgage. My PhD stipend was a fixed term contract, on about 9k a year, which I topped up via teaching. No savings, no deposit. No permanent contract.

After I'd given the spotty young oik a thorough tongue lashing on the sheer cheek of this, I asked out of curiosity how much they'd lend me. 120k as it turned out. Interest only, no deposit needed.

Obviously I didn't take it (was just curious) but it blew me away that they'd even think to offer this, plus they'd really turned on the hard sell.

There's a lot of financial illiteracy and that plus greed and short sightedness and dodgy advice (as in point 2 of lurking husbands point above) is a bad combination. I didn't feel financially ready to buy a house until 13 years later.

Ironically I would have made a killing if I'd have bought a house in 2002 ;)

sadly, a lot of people really haven't thought about 'end of life care' in their financial planning. You see it over and over, the question of "what if one of us dies" gets asked and planned for, not "what if one of us needs care the other can't provide?". I'm sure they read the fine print about what would happen if one outlived the other, but care homes really haven't been on the radar for a lot of older people, particularly this first generation who aren't all dying quickly in their early 70s of short illnesses. The idea of needing to be looked after for 10-15 years is a new one, coupled with being the first generation who's adult DDs or DILs are more likely to have a job or have moved further away so not around the corner to pop in daily to do the care.

This couple does sound like they just fell in to the trap of seeing 'potential' money of what their home was worth if they sold as the same as 'real' money they could get by selling it. I guess they didn't see what they'd done was effectively sell part of their home, they still saw it as theirs.

I've dealt with equity release as a solicitor. Potential fees are clearly set out. We have to go through it in detail with the client and confirm to the lender that we have explained certain things to the client. If forget if fees is one but I certainly went through them anyway. Sorry, but if these people chose not to listen or didn't check the fees when they moved, I have no sympathy.

Skiptonlass

Thanks for solidarity . One of the arguments I would have with MiL was when I expressed the opinion that very few - if any - of the Daily Mail sad faces who had "just discovered" they couldn't pay off their mortgage were deserving of sympathy. They were greedy and stupid enough not to realise they were stupid and therefore "didn't need" advice, and they are now where most greedy, stupid people end up. As it transpired, MiL was greedy, and stupid, and criminal. But that's another story.

It's very simple. Balance of probabilities. If it sounds too good to be true. It is. The odds of you missing lifes golden ticket from having that attitude mean that it will save you more times than it would lose you.

Well the io mortgages are another time bomb waiting too happen. Thankfully the UK economy is solid and house prices are not in a bubble

Why is their character any concern of yours?

You seem to be rather too ready to judge other people.

I don't think interest only mortgages can be a time bomb waiting to happen. My provider has been making it abundantly clear to me that my endowment won't pay off the mortgage for at least 15 years. Even though the mortgage was paid off even longer ago and the endowment is no longer assigned to a debt.

Why is their character any concern of yours?

When you allow your life to be put in the public domain, you invite comment and therefore judgments.

Aren't you talking about an endowment rather than IO though soupdragon? I think a big problem is that there were people who couldn't have afforded to buy the home they bought on a repayment mortgage, so got IO, and have relied/are still relying on prices increasing so there's enough of a chunk left over at mortgage maturity to be able to buy something else.

I think judging someone's actions is one thing. Claiming to know their character is quite another and the OP seems a bit quick to assume she can judge people's characters.

Twenty years ago endowments were sold as a vehicle that would pay off your mortgage, and give you a small nest egg payment. Most people got an endowment mortgage.

Re-reading the article the couple who bought the boat were left with 113k after repaying the Equity Loan and the Early Release Fee, is it just the 16k they were arguing about or the fact the 42k loan had increased to 119k. I am not sure why they had to borrow money from family to repay the 16k as they received 113k once everything had been paid back. Also, surely when they moved and took the loan with them they would have had advice from the solicitor or someone as to what the loan currently stood at?

I'm not sure I understand any of this at all!

I think a lot of people are very short sighted about equity release and don't really understand that in the long run it's probably going to cost them dear.

I had a work colleague who was considering it who seemed to think it was money for nothing.

Most people that are lending you money need to be treated with informed caution.

yeah, very limited sympathy. this wasn't like say PPI or whatever, a grotesquely overpriced product misleadingly sold.

FOS found for aviva. FOS will be looking to find for the consumer so it was probably clear what they were getting into.

Pension freedoms will definitely be a scandal at some point as it's discovered the money won't go as far as they want.

That was two spotty, hardly worldy wise, 22 year-olds in 1988.

I took out a mortgage in 1987, at the same age. I was offered an endowment (this was a couple of years after tax relief on life assurance premiums disappeared, taking with them the main justification for endowments). I looked at the paperwork and saw I was being offered a "low cost endowment". I asked whether there was, therefore, a "high cost endowment". So I had explained to me the absolute reliance on investment gain in the product (ie, that the guaranteed sum assured was less than the mortgage) and ran, rather than walking, to an repayment mortgage.

As you say, if I could figure that out 12 months out of university, why should I be sympathetic towards people who didn't read the paperwork in front of them?

People need to understand what they are signing and agreeing to. There is no excuse for not reading the fine print.

I bought my first house, nearly 20 years ago with an endowment mortgage, after having the hard sell from the Halifax mortgage advisor I saw in the Halifax estate agents offices - anyone else see a conflict of interest there?

It was 'under-performing', but thankfully we part exchanged the house for a new build, getting rid of neighbours from hell along the way. I did a short term IT contract for Zurich financial services (after working in the City) and got on really well with one of their advisors and asked him about IO mortgages, as I couldn't reconcile incomes with lifestyle for some people I'd met. His response was 'It's usually cheaper than renting, and, oh, by the way, the cars are on HP as well. If one of them loses their job, they're screwed'. I appreciate this isn't true of everyone.

Our mortgage is now a repayment one, and I'd rather save and buy a car outright, than have one on credit. After being stung once, I am now very risk adverse, financially.

Limited sympathy here too. He was an accounts manager at the very least he should have understood about the compound interest!

Greed and not bothering to read the small print.

I disagree that people haven't had to think until my parents generation about care/a partner dying. My great grandparents took this into account as did my gp and planned accordingly (not wealthy but gp homeowners).

My parents have too though dad (abusive in every way) has stitched mum up in such a way that if she leaves she gets nothing. She's signed stuff but I would argue as there's abuse that it's coerced.

I always think my mum in these situations, who in I think 1987 went to buy a VHS video recorder, and the guy offered credit, and my mum wasn't great on percentages so she asked him to calculate how much she would pay in total. For a £300 video it came out at £550. "Oh wait... that can't be right" the guy says, to the rapidly retreating back of my mum's head. Off to the co-op, name down for their savings club, video arrived in our house 6 months later for £300.

When people say "we never knew this would happen" I always wonder, were they not curious to read the paperwork they received? Or if they're confused, why not do like my mum and ask the sales guy to calculate and write out the numbers you're interested in? They can hardly refuse to do it for you. People just want to go "la la la" and have all the upside with none of the downside. Having said that, the City is exactly the same and lots and lots of banks and bankers got bailed out in exactly the same circumstances so why shouldn't individuals have a go too? I think we need to have stronger regulation of financial products so that on both sides (consumers and firms) it's not possible for people to take risks that they're not willing or able to pay up on if things don't go their way.