S.A.M. (Shared Appreciation Mortgage)

Les_Skeet

In October 1997, Bank of Scotland valued our new house @ £150k and lent us up to 25%, ie £37.5k. No interest or principal repayments required unless we sold the property. They do however take 75% of any improvement in value for that service. No one predicted the inflation in house values at that time and since this has more than doubled in almost ten years, up to the present time, their share has reached ridiculous proportions. With the value now at say £310k, a repayment amount of (310 - 150) = 160 x 75% =£120k - {S.A.M.}, plus original advance £37.5k leaves an equity to us of only £152.5k.
The figure of S.A.M. equates to more than 30% simple interest per annum, a hefty rate in anybodys language! I appreciate the fact that we signed the mortgage document initially but is there any similar predicaments around and/or is there any hope for a properly-founded argument against this extortionate amount, please.

payless

Have not checked your figures , but it would be unfair to quote a basic simple interest, as compound would be fairer comparison ( think that would be about 14% pa if it was intterest ... but of course it was never interest it is share of property value)

Sounds like you knew what you were doing ( or at least understand it now)

If house prices had fallen, would you have offered BoS anything to cover their "losses"

I assume you have googled and found the likes of

http://www.samvic.co.uk/
Did you need the money ... without it would you have purchased something smaller , or looked at other "equity release schemes"

TangentMan

Les, can't see your argument here. You have lived mortgage payment free for 9 years as part of the deal - have you factored that cost into your calculations of "extortion"?.

In terms of not predicting house prices doubling - that seems irrelevant since you are translating it into cash and viewing the cash as yours, which it isn't.

Sorry, i know i am probably not giving you help in your fight. If you are determined i think you need to decide if you understood the SAM proposition and therefore you might have a change at claiming something that way.

plane_boy2000

Sorry Les, but you cant just move the goal posts because you dont like the outcome - looks like you are bitter, but at the end of the end of teh day would you have refunded them 75% of any loss? They took a risk and it paid off besides you only have to repay when you sell,

jamesd

Congratulations! You've gained a 25% interest in appreciation that you would presumably not have had at all if you hadn't used this mortgage type. That appreciation has gained you 16.9% a year for every year you've had the mortgage, an excellent return on your investment.

You've received due benefit for your risk, as have they for theirs. Had prices stagnated or fallen, they could have received no benefit or a loss. Such is the nature of the risk they took. This time it paid off for them. And for you.

Xbigman

Bit of a harsh thread so far.

If you took out a SAM to release cash from your home then you are pretty much stuck with it I'm afraid. I know that there has been some mis-selling claims over SAM's but I'm not aware anyone has got anywhere with one yet. You could go down this route but it might be pointless unless you did not understand the basic way SAM's worked or you were misled as to the possible ramifications.

The simple truth is that all equity release schemes have the drawback that you effectively give up part of your home in return for cash. SAM's can be better or worse than the others, depending on exact circumstances. It looks like your situation comes under 'worse'.
Sorry for the bad news.
Regards



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