To think he could pay some off himself?

[Cobblersandhogwash]

My dad took out a £30k loan. One of those loans that are equity release. He has a flat. He’s spent the money. I don’t really know what on.

The loan has grown to £50k over six years. Dh and I have said we will pay this off for him but can only do it early in 2018.

We are worried that he will in effect have sold his flat for £30k. Top floor flat so when he becomes frailer, he would have to move to a more appropriate property.

But if he has to pay off this loan with the sale of his flat, he could end up with very little cash with which to buy another.

Meanwhile, he’s making zero payments on this loan. So I expect by next year, it will be more than £50k.

Aibu to be irritated by this? He should make some payments? He goes on holidays, has a cleaner, socialises lots. Has a great retirement which I’m delighted about.

Aibu to say to him our limit is £50k? But then if he doesn’t pay off the rest, our contribution is pointless as the interest will continue to grow?

《the council would house him in an appropriate property》

Like a hostel. Enjoying your last few years is fine if you are clear exactly how much time you have left. Burning through everything and ending up old and frail and destitute is not much fun.

Eh? Then he needs to sell his flat.

If you have 50k to happily hand over to someone who just frittered it away then go right ahead. But don't post a thread about it, moaning.

Could he sell it now?
Pay off the debt.
Then what's left, club together you and buy a shared property so you have something back for your investment?

If you are worried about him affording a more appropriate property later in life then you would be better off saving your £50k and putting it in a high interest account to help him later on rather than now, when he really isn't seeing the consequence of his actions on his loan

Be careful about paying it off he could take out another.

How much is his flat worth? I would suggest he sells it now.

I wouldn't be paying this loan off if he is not contributing at all. Not because of the moral aspect (though there is that) but because if that's how he is with money you will pay it off AND end up baling him out at some other stage.

I'd put the money aside to provide for his proper old age, knowing that he won't do it. I don't think you SHOULD give him anything, by the way, but having this type of dad myself I know you will most likely want to for your own sake.

If you have 50k to happily hand over to someone who just frittered it away then go right ahead. But don't post a thread about it, moaning.

Harsh. Very harsh.
Op has posted for other peoples' views. Just like everyone else does on MN.
Sounds like you are jealous sonicboom that op has £50K at her disposal.

The whole point of this type of loan is that you don't pay them off, the interest is rolled up and the loan will never amount to more than the value of the property - that is the ceiling of indebtedness. The point is to enable home owners to enjoy or otherwise spend the equity in their houses. I presume that in due course if the flat is not suitable your father could get a housing association or extra care flat to rent?

I am guessing you are paying it off so the equity release company won't get it when he dies?

Why are you paying?!

And if you don't know where the money has gone - what's to say he won't take out abother loan and do it all again

Why is he not making any repayments when he can afford a cleaner and holidays

Has he always been like this or has something happened. Have you always bailed him out

A load of questions I'm sorry. But I just don't get it. You sound lovely but naive to expect paying this off will be the end of it

Could he sell his flat to pay off the loan, then with the remainder buy a new one and you pay £50k of new flat so you part own it. Then at least you still have your £50 in assets

I think the question is, what are you hoping to achieve by bailing him out.

Then imagine of you did so, what’s to stop him from doing it again.

Therefore if you are going to bail him out, I would pay off the full amount and make it a prerequisite that you get the percentage equity in his house that you put in. That will now be 50k+ not 30k.

If he isn’t willing to do this, I’d walk away and invest your money elsewhere whether it be in property or in other investments and write his property off as sunk. That is, unless it’s worth a lot. But there is a big risk of a) his doing the same again and b) never seeing your money again either in inheritance or repayments.

I think the op is worried about her inheritance!

With equity release you can only pay the interest per year or up to 10% of the total. To pay off the entire sum would incur a huge financial hit op. They are not designed to be paid off until the person dies or goes into care.

Let your father enjoy his money!

Why are you paying his loan? How are you helping him? You’re just enabling his spending.

It depends on how old your dad is?? If he lives another 20 years, the interest on the equity release loan will be huge so I can understand why you'd pay it off for him on that basis to protect your inheritance. But if he's in his late 80s or 90s, then to be honest I'd leave well alone and let it come out of the sale proceeds when he's passed away.

As for the PP who said the council have a duty to house people, that was all well and good 30 years ago before the chronic housing shortage. My dad was being made homeless as the landlord was selling his house, we tried for months to get dad a home through the council and all they could offer was a B&B. We had to pay for the deposit and guarantee the private rent so he had a roof over his head.

Yes, I'm paying it off so the equity company won't get his flat when he dies. A flat worth £250k sold in effect for £30k.

He's been a total fool on the hill about this. We've had many discussions about it and he recognises that. But I want to help him out.

We will be drawing up a legal agreement to stop him from taking out further loans on this property. We will own a % of the property as a result of our giving him this money. The money will be paid direct to the equity loan company.

We thought we would do this because it's the simplest way to deal with this problem. Any other insights / advice would be appreciated.

But I am irritated that he isn't making any payments on the loan at the moment. I think he should. I will have to talk to him more about that.

Plus he paid for me to do my master's degree so I feel like this is a chance to repay some of his generosity.

Are you intending to pay it off in one go, or just take on the payments?

You'll want to be careful about the implications, from a deprivation of assets point of view if he needs care later. Also inheritance tax. I’m sure their is a clever, and not so clever, way to manage this.

I think the OP is worried about her elderly parent's future.

Don't pay the loan off. Instead make him an equity loan, registered with the Land Registry, to replace the one the had with the mortgage company. This should be repayable on death or by mutual agreement.

Then if he needs to move to somewhere more suitable, for example ground floor sheltered housing, you can agree to "port" the loan. You should set up a reasonable rate of interest, depending on what other heirs would consider reasonable, though in practice it will simply be added to the loan wiping out his equity.

As long as he cannot raise a further loan by a deed of trust or whatever your means of achieving this is, i think you are probably right OP

But take some advice regarding the position if the flat needs to be sold in future for care

Oh brilliant. Thank you so much for this type of advice about equity loans. I really appreciate it.

One of the big selling points of Equity Release is that you don’t make repayments on it.

Also it is extremely unlikely that the Equity Release company would get the whole flat.

Have you seen the terms of the agreement and have you/your father taken specialist advice on the specifics of the situation?

Needmoresleep, what do you mean by "port" the loan?