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?

my DGM looked at equity release.
From what I understand and the figures she mentioned to me,
She was going to take 50k from a 250k house, but the "debt" doubled every 10 years.
so in 20 years, the "debt" taken from whatever the house is sold would be around £200k. Obviously increasing house prices over those 20 years are to be taken into account, but if the house rose to say, £300k, there would only be £100k left after the loan was repaid IYSWIM.
I think that's why she decided against it in the end.
The figures you mentioned - 30k to 50k in just 6 years - sounds extortionate.

These things are often front loaded to help mitigate the risk to the lender. That doesn’t make them extortiant but may make them an unsuitable product.

...for some people.

The whole point of equity release is that there are no repayments.

The older person living in the property has the benefit of some cash to spend on whatever they want to spend it on but can live in the property as long as they want or until they die.

Depending on the terms the contract may not fall within an undair contract because the borrower has the benefit of a non-monthly repayment type loan.

If you want to clear the loan to protect "your inheritance" that is up to you but your father could then borrow again anyway!

I

Equity release schemes have had a bad press in the past but things have improved a lot in recent years.

Having said that, they are not for everyone but they can be a very good way of releasing money from a house in say London or the south east where prices have risen so sharply over the past few years.

It is also a very good way to ensure your children don't have a hefty inheritance bill to pay when you die.
At the moment the figure at which it kicks in is fairly high, but it would only take for instance loony Corbyn and his politics of envy to get in and just watch how the figure would drop.

It is also a very good way to ensure your children don't have a hefty inheritance bill to pay when you die.
At the moment the figure at which it kicks in is fairly high, but it would only take for instance loony Corbyn and his politics of envy to get in and just watch how the figure would drop

Err, I am no Corbynista, but you do realise that the OP would be better off being taxed 40% on the proceeds from the flat, rather than inheriting nothing because the equity release company has swallowed up most/all the value? (And that's before we get into details like the fact that there's no IHT at all if the state's under £325,000, extra reliefs for married people and houses, let alone considering whether it's fairer to tax unearned wealth rather than income that someone has had to go out and work to earn)

AgeUK may well be able to offer advice on this.

I'm astonished that the debt has risen by so much in such a short term, but a PP's comment about them being frontloaded explains that.

I'd also look into his finances generally. If he's got through 30k in six years, he's spending a lot more than his income. Is there anything he could be claiming that he's missing out on, eg pension credit if his income is low or attendance allowance if he's getting frail? And are you sure that he has the capacity to manage his own financial affairs?

If the debt has risen from 30K to 50K in six years, that's nearly 9% a year interest. If OP can take over the other side of the arrangement, at least he will be paying an extortionate rate of interest to someone he'd presumably be happier to seen benefiting from it.