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?

As there is a solicitor working for you when you remortgage your house as far as I am aware you have your own legal advice at the time so pretty hard to say you had no idea. I had an interest only mortgage (am in my 60s) until last year when I paid it off. Equity release mortgages are different from my ordinary interest only one (I still work full time) and all the older people know full way you lose your house when you die if the debt is higher than the house value.

My DM and her partner (now deceased) did this around 3 years ago - they took out a later life equity loan payable on sale of house or death.
My DM is now in a home and I have LPoA, and only found out about this when the LPA became active. The paperwork said they'd discussed everything with the family and we were happy for them to proceed ... they didn't, we had no idea.
Anyway, sorting out DM's concerns, I came across an S&S ISA that pretty much covered the equity mortgage. I suggested to DM (also with approval from the rest of the family) that we should release the ISA and pay off the mortgage. All it was doing was getting bigger and bigger every month because she too, wasn't paying anything off it. The % added every month was eye-watering! She agreed and we were able to redeem the mortgage.
We were "lucky" in a sense as the debt is gone, but I feel your pain @hobbitum as it's a shock to the system when you first find these things out.

Absolutely

I am so glad you were able to resolve it successfully.

I don’t know if this is a factor for your DM, but we see on MN how many women even today farm out financial planning and decisions to their partners. This especially true for women of older generations with more traditional upbringing or a less than optimal education when women’s education wasn’t considered important. Too many older women have signed these contracts on the basis that their partner understands them and thinks them a good thing without really understanding what the roll up of interest implies, the porting options, redemption fee, impact on inheritors.

Three ladies I encountered personally, had no idea their husbands had signed away the house, despite the fact they had to sign the contract, they were under the impression it was an ordinary mortgage.

DM definitely knew but as her mind was slipping (diagnosed mixed dem/alz last year) she'd forgotten all about it. It was a bit of a struggle at first trying to sort it out, but LPA lets your delve where otherwise you'd just be met with brick walls.

BTW - this was not redeemed for inheritance, rather to stop the meaningless monthly increases and have funds available for her care.

I am going to sound very harsh here but I am honestly sick and tired of elderly parents siging things and then bleating that they dont remember and try and become a victim. The adult child goes into battle based on what the parent has told them and guess what - they have fibbed and lied to cover up what they have done. Its then all left to the children to sort it all out and it takes AGES AND AGES.

I accept that they might have dementia or in poor health but its really not on. Where is the money they have released? Spent? Hoarded? Brought crap? Stuffed under the mattess?

LPA can be used and should be when they get to a certain age. It can run on in the background and if they want our help in the future they need to give it to us. I noticed that a PP states it cannot be used until they lose capacity but that is only true for Health. The Financial LPA can be used immediately it is issued.

@MichaelandKirk I actually mentioned this before- a problem of not telling your family's these days if drawing down on your house ( and I understand why some don't- their own business etc ) is that further down the line family can be beavering away trying to help in downsizing/care home situations and not really being fully aware that the home isn't quite as 'owned outright' as they thought and decisions need to be made accordingly.

@MichaelandKirk I'm quite pro people doing this if it's sensible amounts at a sensible age- but I do think it's better to be upfront with anyone who might need to know whilst you are in 'sound mind'

I know this is an old thread, I've just read it through. DH and I are in a position in our sixties where we have a house worth a lot of money and an IO mortgage (yes we were daft!), three adult kids and lots of things we want to do.

We've explained to the children we will most likely be taking a Lifetime mortgage rather than going through the stress of selling and moving somewhere we probably wouldn't really want to be - this is ours and their home, so we want to live in t and have them back (and the flipping gchildren - love them...!) whenever they want to, and downsizing just means a lot less space.

They were wholeheartedly 'go for it' when we explained there would be little or no inheritance, which was our main worry.

Of course we have spoken to our financial advisor and he has done us the quote. No negative equity, so if the amount owed is more, no worries for the kids apart from selling dh's vast record collection and clearing stuff out -but we all have to do that at some point!

I wont lie - it is slightly scary but the pros really do outweigh the cons, the sector is hugely regulated and whilst DH is now retired, I'm not due to for a few years. Doing this means I can, or at least massively reduce my hours and we can do a lot more of things we want to do together - we've had over 30 years of raising the children and loved it, but as the oldest dc said 'This is your time now'.

People see Equity Release and do remember the bad unregulated days I know, but really, at our ages, its a hugely popular and sensible move for some.

It's quite simple. If you want to leave an inheritance, don't do equity release. If you have no kids / family on the other hand, it's a great idea.

There is a possibility of mis-selling here, so don't give up on that. When you've got all the paperwork you'll be in a better position to see if that might be the case. I would write to Katie Morley at The Telegraph - she's brilliant at this kind of thing.
Tbh, if your grandfather thought that everything was ok with the mortgage, it's quite possible that it was mis-sold. Or, he didn't have the capacity to understand what he was getting into in the first place.
Best of luck with everything.

I am in the position where we have several older members of the family, think late 80s, early 90s who are finding that they now have care needs.

I would think again about signing u for this. Whilst it does seem like a good idea now, is your home completely future proof? Have you got a space downstairs that can be used as a bedroom? Is your bathroom a wet room? Are you able to get in and out of your external doors easily?

My DF was great until his mid-80s. Luckily his was already in an adapted flat on a retirement complex so when his health did start to rapidly decline it was so much easier for him to cope than if he had still been in the family home.

Have a good read through the Elderly Parents section too. It’s full of posts where MNers DPs are living in unsuitable houses, often with no money for maintenance and in the middle of nowhere.

If it was me i would work out the compound interest on the loan as it can often be a bit of a reality check and consider downsizing again

We've looked at the compound interest and yep, if we live for 25 or 30 years more it looks eye watering for sure! We've discussed with thr kids that they will get nothing in the case and they have no issue with this. The house is adaptable but we can
port it over if we did want to downsize.
It's a massive thing I know but we're not going into it blindly.
We're sadly not quite the millionaire discontented boomers that we're all lumped into be, just at a stage where, for various reasons we are stuck with an IO , albeit smallish, mortgage with no realistic way of paying it off, and feel this is a solution that would work for us

We're also in a big city a mile from an excellent hospital!

What was your plan for clearing the capital, out of interest?

I was pleased when my Mum did it as it meant she could stay in her home. Downsizing wasn't an option and I'd rather she had the money when she needed it than leave it to me. As it turned out the type of equity release that she did meant I did get an inheritance but her security was more important

What happens if almost all the capital disappears into the equity release and the person needs to be in care home eventually? Surely they’ve then made themselves dependent on state care and removed choice (which home to go into, when they can go)?

We had planed to see as can easily buy somewhere outright with the equity - just not in our home city though. We started looking earlier this year at villages nearby and it's still another option at the moment. The LM would let us stay here or we can port it if we do want to move in later years.
Yes, of course the thought of care is another thing to consider.
It's really not the easiest decision and f course I wish we'd had better paid careers, and had a repayment etc...just...life happens

*sell, not see!

Yes that’s right.

He must have got a lump sum from this, what did he do with it? I didn't think there were any payments to make, they will get their loan back when the house is sold and the remainder (if any) will go to his estate.

https://www.moneysavingexpert.com/mortgages/equity-release/

This article may help to at least know what you might be looking for in the original contract, or what questions to ask if you contact the provider.

We've had 2 meetings with our advisor and are still thinking it through! It's a big decisionalthough seems logical in our particular circumstance.. Also yes I get the care home fees issue too.

In my Mum's case she was able to stay in her own home until she died because we were able to make the house suitable with a stairlift and then downstairs bedroom. If she'd downsized she wouldn't have been able to do that.

Equity release can work really well but ideally into mid 70s and with ‘a lot’ of equity and drawing £75k or so and I’m talking 500k plus of equity