Equity Release Situation - advice needed plse

winnie12

My Father took out an equity release on his house over 5 years ago. At the time, he and my Mum were separated (not legally) and had been for a number of years, so it was in his sole name. My Father died at the back-end of last year, but unfortunately my Mum had moved back in a short time before his death. He intended to change the policy to somehow cover her on his death, but didn't get the chance.

Now, as the executor, I've informed the equity release company of his death, but haven't said anything about my Mum being in the house as this wasn't on his agreement with them and I'm worried what the implication is, and whether they will want settlement earlier etc. They understandably want repayment, however the house will need to be sold to do this, which then leaves her without a place to live. I'm unsure of the best next steps in talking to the equity release company.

Can anyone guide me as to how the equity release company might react to his spouse living there under these circumstances (should I tell them?)?
Also, the terms of the policy say it should be settled 12 months after death - is this a hard date or in anyone's experience are companies flexible? Any help is gratefully received.

Thrugelmir

Did your father leave a will?

Did he leave other assets with which to discharge the debt?

Who is living in the property is of no consequence to the lender. As there is no relationship between the parties. Your obligation is to discharge the debt.

winnie12

He did. I'm the named executor and beneficiary. It's a very short will (that was literally it)

Thrugelmir

Your issue appears to be that of clearing the debt.

Is the debt sizable? Could you obtain a mortgage?

winnie12

The problem would then be paying a second mortgage (mine + that one). I wouldn't be renting the property out to cover the cost of the payments.
I think at some stage, the property will need to be sold to cover this debt and other debts, it's just a time-issue I'm trying to figure out

Thrugelmir

winnie12 wrote: »

The problem would then be paying a second mortgage (mine + that one). I wouldn't be renting the property out to cover the cost of the payments.
I think at some stage, the property will need to be sold to cover this debt and other debts, it's just a time-issue I'm trying to figure out

The interest will still be compounding on the debt owed.

winnie12

I know that interest will be due on the equity debt. But this is not something which I am personally liable to pay monthly, whereas a second mortgage would be. Other debts are frozen, and equity interest comes from the estate (what there is of it).

I'm really just wanting some help as to how much to the year of repayment the ER companies hold you to (interest aside) and what kind of response I might get if I tell them the full circumstances

Wh05apk

I think the issue here is that you are now the owner of the house, and so it is upto you to repay the equity release mortgage, had the property been left to your mother then presumably she could have taken an equity release mortgage in her name to repay it, as it is I think the only option would be if you could remortgage the property either as an interest only residential mortgage if your income permitted, or else as a regulated btl mortgage (regulated because a family member will live there) if your mother was able to contribute rent to you to pay the mortgage, failing that could you sell and buy her a smaller property?

getmore4less

Wh05apk wrote: »

I think the issue here is that you are now the owner of the house, and so it is upto you to repay the equity release mortgage, had the property been left to your mother then presumably she could have taken an equity release mortgage in her name to repay it, as it is I think the only option would be if you could remortgage the property either as an interest only residential mortgage if your income permitted, or else as a regulated btl mortgage (regulated because a family member will live there) if your mother was able to contribute rent to you to pay the mortgage, failing that could you sell and buy her a smaller property?

The OP is not the owner
It is currently owned by the estate trust along with the debt.

The first thing is to get a statement from the equity release company of what is owed and at what rate that is accumulating.

Also have a good read of the agreement T&C.


Was you mother dependant on your father in any way that may open up options, problem might be the recent return may not be long enough to show a dependancy for housing where was she living before and how was that paid.

There may be the option to do a DOV and leave the house to the mother if that will help with any potential way forward on loans/taking over the equity release mortgage.

With the current market I can't see how they can have hard deadlines especialy where the desire is to sell and it that is having issues.

Whats the house worth whats the debt

winnie12

Thanks all for your help.

Getmore4less - my Mum's lost her house, which was the main reason she returned. It was literally a matter of weeks before he died. Financially he had been helping her out in small ways, but nothing official. I'm maybe being dim, but what's an 'OP' and 'DOV'?

The house if worth approx £130k. Equity debt £36k and other (non secured) debts £30k.

Wh05apk

getmore4less wrote: »

The OP is not the owner
It is currently owned by the estate trust along with the debt.

I realise that, but once the will etc is sorted the OP will be the owner, as opposed to the mother.