My grandad completely forgot he took out a lifetime mortgage

[hobbitum]

A few hours ago I didn't even know what a lifetime mortgage was and wish I didn't now!

My grandad is 90 and thought he had paid off his mortgage. He was getting annual statements that he was putting to one side and not looking at properly thinking they were just a formality.

He was informed this week a new provider was taking it over and his friend saw the letter and realised what has happened. He has made no repayments or paid off any interest for who knows how long.

My grandad doesn't remember taking this remortgage out and it now looks as if it will take his home and every penny of his when he's gone.

The more I find out the more I'm worried there is no recourse and his own awful mistake. He's devastated, completely shocked and feels a failure - I think this will seriously affect his health which is my main concern. He is of sound mind.

I don't know why I'm posting here to be honest - surely mortgage lenders should be checking in on customers like this and doing a bit more than just sending standard letters and waiting to take everything when you die? I just don't know how he could have got himself into this situation. What on Earth can I do to help?

I'd have more sympathy if he hadn't been setting aside the correspondence. Perhaps if he'd read the statements he'd be in better shape now.

These equity release schemes, what you have to remember is that interest and fees are high because they do have to cover situations where the homeowner lives a long life. The bank has no idea what state the house will be in when they finally take it over. What its value will be, what repairs/remediation might be necessary to make it saleable, etc.

Equity release can be quite useful especially for unmarried people who don't have to worry about jeopardizing a spouse's dwelling, but they are costly, for good reason.

It's a charge put on the property but only payable when the house is sold either on death or moving into a care home.

I think equity release will be the next financial scandal.

Why?

It's fully explained and the homeowner's decision

The only ones that lose out are the ones who might inherit.

If the equity release was taken out over 20 years ago and no payment was made in that time, then yes it will be massive and more than likely take most if not all of the remaining equity.
Sadly that’s how equity release works. We took out equity release about 5 years ago to cover some debts and help children out.
We tried our best to make payments that atleast covered the interest that was added every month… but it became impossible. We realised quite quickly that in 30 odd years time, the amount outstanding would take all the equity in our house and there would be nothing left for our children.
we made the difficult decision to sell our house while we still had enough equity left to be able to buy ourselves a small flat.
in your grandad’s case, can you contact the lenders and try and find the original paperwork?
I wonder if he really understood what he was taking on?
it was very clearly explained to us but it might’ve been different 20 years ago.
im so sorry he has found himself in this position.
All you can do is reassure him that your only concern is his happiness and health and that he shouldn’t feel guilty if he doesn’t have an inheritance to leave you. Xxx

My Dad and his partner took out equity release back in 2007 for £15Ks worth of double glazing. No issue with his faculties generally back then. Roll forward to last year and on selling their house that £15K had changed into £55K - the joys of compound interest.
Thing is they had the cash to just buy the windows straight off but didn't want to eat into their rainy day nest egg, at least that's the most rational explanation we've had. Back then Dad would often ask advice but sadly not on this occasion. We did have our solicitor look into it but it was 'tighter than a ducks arse' it seems.

Hi OP, having had two very elderly parents to deal with. Please take a deep breath. Although LPA takes weeks I was given a General POA through a solicitor who assessed my DF. It was usable immediately. This was five years ago so things might have changed but jolly useful it was too! Had no issues touting it around the various financial institutions.

Be really firm here. I am going to be somewhat harsh but grab this by the balls and run with it. Your DGF is 90. He is not mentally all there. Accept this and move on. Don’t waste any oxygen trying to find out whether he remembers or not. He is embarrassed and could well fib about what he remembers or not.

You need to find out the facts. He can fund you and he going to a solicitor and getting an immediate POA so that you can then register it and find out what has really gone on. Don’t be surprised if you have only been given half a story. One of the financial institutions got the police out when my DF made some statements about what he could and couldn’t remember. In the end it was a mixture of embarrassment and dementia but it took a number of weeks to get to the bottom of everything,

People are allowed to make poor decisions. How many times was I told this by various institutions and social services.

Until you have all the facts you are relying on a 90 year old to brief you.

When did he take it out OP?

The only ones that lose out are the ones who might inherit.
No, I disagree, often the intention is to still leave a substantial amount to the children or family. Not fritter ones life savings away.
As in this case Grandpa is distraught that he has nothing to hand on to his loved ones.

On a positive note if he has to go into a care home he will not be expected to pay fees from the sale of his home?
It is worrying though a lot of older people have poor memories and I can see how they could be scammed with this. As others have said make sure you find all the paperwork.

A lot of older people see passing on a home as passing on a legacy for their family. His son is dead and you're all he has left, and he can't pass you a house.

I think it would be good to focus on what he can leave you - his love, his memories, his knowledge. You could spend some time with him, interviewing him on tape so you can pull together a special 'family book'.

No one in my family makes it to 90. At 90, he must have some stories to tell.

You just have to reframe what legacy means, why it's important and how he hasn't let you down. Having lost your father, you know - hell, you both know - how important time is. Your grandfather has given you lots of that.

Most of us would give any money away for more time with our loved ones. I suspect both you and your grandfather can understand that. You both know what it's like to not have 'enough' time with the people you love.

I thought the same. He probably got a lump sum. If it was a mortgage there would have been records of repayments on his bank account. With equity release no repayments.

But what if you did need to though?

This is usually people in their 60s doing it and they’re essentially making a decision then (and possibly not realising it) that they’re never downsizing, never moving to be closer to family or never moving into a bungalow or more suitable property as their mobility decreases.

A lot can change over 20-30 years and you don’t know for sure that it won’t be in your best interests to buy a different property as you get older.

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.

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

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.

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.

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?

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

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

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

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

Oh what an awful situation for you. So even if you make interest payments it still runs away with you? That must have been so upsetting. At the very least you found a solution before it was too late, even if your hand was forced.

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.

That's such a thoughtful thing to post. Thank you.