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?

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 🌺

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

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.

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.

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

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.)

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

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.

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.

wow, that makes it so easy

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

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!

I used to work in equity release, we had a part of the form where the client had to confirm they had told their family as otherwise you could have angry relatives on the phone after death.

The number one reason for people getting it (by a long way) to pay an existing mortgage in the house. You would get people that over the years had remortgaged and remortgaged to pay for extensions or new kitchens etc and then they got to retirement they still had years left but could not pay the monthly payments on their pension.

Number two reason for taking it was to give the kids their inheritance early, so alot of people take it and then give the money to their kids for a house deposit or something.

Buying a caravan was a very popular one or home improvements.

How much did he borrow, what was it used for and what’s the interest rate? If the interest is unfairly high then there might be a case to be made. A salesman could make it appear very attractive, and not mention the large commission they would earn.

You can't just 'get out' of it: if it was missold, then perhaps there'd be a legal route, but it doesn't sound as though it was. He's of sound mind and there are options to ringfence some equity in the house as inheritance, which it sounds like opted not to do - just because he's not looked at the paperwork and forgotten about it since does not mean something untoward has happened.

Much has been made about these products being predatory, and in some cases they were missold or borrowers weren't given thorough advice (it's certainly worth OP looking into whether he took advice out originally - she should contact the lender and they might be able to help). But the chances are he took the loan out in full knowledge of what it was - lots of borrowers take equity release/lifetime mortgages out because they don't have big pension pots to fall back on. They're an expensive kind of lending, sure, but they're one people are taking because they didn't make different financial decisions.

Bless him and you.

my gran did the same. So yes she never had to pay it back until after she died and then it was sold and the company got the money, nothing left as an inheritance. Which was fine.

i think reassure him. Tell him you’re glad he had the money to enjoy life when he was young and fit enough. Remind him of how great his holiday was, how he needed the car, etc. even if you don’t think this just reassure him. Tell him he made the best decision. And keep reminding him it’s still his house for his lifetime. Tell him it was a win, win decision…..he got money and kept his house. Tell him you don’t need any inheritance, etc. anything just to stop him worrying because what’s done is done.

I'd add that there's this rhetoric about "Equity Release Companies" and while they do exist, you can get them through Halifax or Lloyds (via Scottish Widows) plus companies like Legal and General or Aviva.

This. Once a mortgage is repaid they don't send you any more statements because you no longer have a mortgage.

Exactly. They are many that are quite mainstream.

DM did an equity release after DF died but there was no interest as such, she was given a set amount in return for an agreed percentage from the sale of the house.

When she died I didn't notify the equity release company until after her funeral so there was no rush to sell and they gave me time to clear the house - I obviously wanted some of her belongings. Once that was done they handled the sale but only accepted an offer if I was in agreement.

To be honest in our case it was nowhere near as bad as I was expecting but I know not everyone will find that. I do know she had to take advice and I remember seeing a solicitor with her.

(I never thought I'd mention this on MN again as last time I was told we were both stupid, irresponsible and that she should have downsized)

Yeah no way he can cancel but maybe there is something that they can do still? Defo worth the shot to try.

Yes exactly. They're an increasingly normal financial product.

Yes downsizing where possible is usually the financially better decision. But downsizing in old age is emotionally very difficult - leaving behind the family home and clearing out all the memories. It's no surprise some pay a premium to stay where they are.

"...a company charging extortionate interest rates has just earned your inheritance."

Why do you think that they are necessarily charging "extortionate" interest rates?

My father passed away last year. I found out that he and my mother took out one of these lifetime mortgages with Legal & General back in early 2022 (so about 2.5 years ago), at a rate of just over 3% fixed for 15 years.That was a reasonable rate back then and it's looking pretty good right now.