Equity Release Scheme get out!

henlowstu35

We are looking at a scenario and would appreciate any advice. Our in laws took out an Equity Release Scheme a few years ago. At preset it is approx £40k on a house worth £220k and the interested is approx 6%pa.

They were thinking of signing the house over to us to protect against future fees from any longer term care home costs. Can this be done with the mortgage attached or would this have to be repaid before deeds can be signed across?

koexelek

henlowstu35 wrote: »

Can this be done with the mortgage attached or would this have to be repaid before deeds can be signed across?

If would definitely have to be repaid.

Thrugelmir

henlowstu35 wrote: »

They were thinking of signing the house over to us to protect against future fees from any longer term care home costs.

The transfer of the property could be overturned in such blatant circumstances.

Senior_Paper_Monitor

"Turning the house over" as you describe will probably fall under the definition of 'deprivation', depending upon the current medical and mental health condition of your inlaws and future developments

There are several other potential dangers (specifically for the in laws) in such an arrangement.

In answer to the original question - no you can't 'transfer' the mortgage.

I suspect that it it has been left too late to take any 'estate protection' actions but the only way to find our is to take professional advice.

poppy10_2

henlowstu35 wrote: »

They were thinking of signing the house over to us to protect against future fees from any longer term care home costs.

If they are planning to continue living in the property after they 'sign it over' to you, then this would almost certainly be classed as intentional deprivation of assets and the money would be clawed back by the local authority.

Andrew_Ross

Aside from the advice on deprivation.....

To change ownership of the property, the plan would have to be repaid, but if you are able to afford the mortgage then with interest rates so low, you may be able to take out a mortgage yourselves. I believe as the property would be occupied by relatives this could be a standard residential mortgage proposition, although you would need to speak to a mortgage adviser to confirm this.

Interest only would be a fairly cheap way of doing this, but finding a lender who will allow interest only without a repayment vehicle may be difficult.

As an Equity Release Adviser I would always ask the question before recommending my clients take out a plan "do you have any close friends or family who are in a position to assist you", as if their children are in a position to buy the house off them, then this could be done to avoid the need for Equity Release in the first place.

If the plan was only taken out a few years ago there is likely to be a penalty for early repayment. This can be quite high. It will depend upon which provider was used as different providers set up the early repayment charges differently.

So worth while for the in-laws asking that questions first.

A lifetime mortgage which is what the plan sounds like is has an all monies charge which means if just one of them has to go into care the local authority can't put a charge on the property while it is occupied by the other