Bank of Scotland Shared Appreciation Mortgage

jack555

Please could someone give myself / mother some advice.

In 1997 my mother took out a shared appreciation mortgage with the Bank of Scotland.

The mortgage seems different from other schemes that I have read up on because it they generally seem to give an interest free loan for a percentage increase in the future value. The mortgage that my mother has charges a fixed interest rate of 5.99% and also demands a 40% share of the appreciation.

The value of the house in 1997 was £190,000 and the value now is £380,000.

In this instance, although the bank have charged interest of 5.99% from 1997, they also demand a penalty (or shared equity) payment of £76,000.

My mother, recently widowed and in her 70's is besides herself with worry and never understood fully the consequences of this mortgage.

To make matters worse, she has improved the property over the years by way of double glazing, large patio, etc.... but the terms state that the bank makes no allowance for these improvements and is entitled to the uplift in value that these have added.

An example of this is that she paid £6000 for a new patio to be installed and now the bank benefits by 40% of the value that this added. Can this really be legal?

I can not see possibly how this can be reasonable.

I wonder if anyone could advise me on what options are open. The fact that the bank is making huge profits whilst my mother is left worrying herself sick is at best immoral.

I would be grateful for any assistance.

Thank you

koexelek

Sadly, unless she can prove that she was badly advised at the time, I don't think there is much she can do about it.
I know the scheme you speak of ( though I never arranged any of them myself) and the terms were made quite clear up front.

The B of S were obviously gambling on house prices rising significantly after 1997, and the subsequent rises have obviously paid dividends for them.

EdInvestor

Latest news on a lawsuit over this:

http://forums.moneysavingexpert.com/showthread.html?t=1431093&highlight=bos+sam

jack555

Thanks for the pointers / comments.