Lifetime mortgage

moshimum

Can anyone give me any advice? My parents took out a lifetime mortgage 10 years ago which they have come to me about recently due to financial concerns they have. They received £48,000 which they were sold via a cold call to their home by Aviva. They have never spent the money as they were too scared to, the amount is now £54,000 which they have in ISAs etc. The loan with redemption costs now stands at £116, 000. They want to downsize and have been trying to sell their house for 3 years now as they are too old to maintain it (big house, big garden) and want rid of this loan. They feel they have disgraced themselves as they are very proud and have worked hard all their lives to pay for their home and now want to own their new home outright. They need to reduce the house price now to get a quick sale as the maintenance is affecting their health both mentally and phisically but they are in a difficult position because the aviva loan is eating up that option. They have been to the financial ombidsmun who voted in avivas favour and they spoke to an IFA prior to signing up. Any ideas anyone?

ylesia

Hi there

I'm afriad unless your parents successfully win a claim that the policy was missold then they really only have two options when their house is sold. Either see if Aviva will transfer the loan to their new property (will depend on the value of the new property) or repay the loan out of the proceeds of the sale of their house.

Usually with lifetime mortgages then you don't have to repay the full loan if the house sale does not cover it but the house must be sold at the best price.

Lifetime mortgages are really designed to be paid off on either death or moving into long term care. It does sound like your parents were ill advised.

holly_hobby

It sounds as though you are looking for a loop hole for your parents to escape from the Aviva product.

• You say that the Aviva rep "cold called" and sold your parents a lifetime mortgage.
• That your parents before completing the exercise, sought advice from an IFA - following which they continued with the process.
• The property is now too costly to maintain, and your parents in order to sell, are to reduce the price.
• You are unhappy that Aviva, having rolled up the interest payments on the 48k (unless its a home reversion scheme), require this to be redeemed upon sale of the property.
• You have complained to the provider and FOS - whom have rejected your complaint, and thereby apparently declared the sale as jusified and within regulatory guidelines.

Initial Observations.

What was the basis of your complaint to Aviva, and later FOS ?

Did you raise the cold calling aspect of the sale (which I have to be honest doesn't sound correct, are you sure this was how the advisor secured this sale ?)

If so, what did Aviva and FOS say about that ? (as cold calling is very much against FSA regs regarding unsolicited real-time promotions (cold calling). Which may only be conductged if there is a pre-existing customer relationship, through which the consumer expects to receive such promotions.

Further to which, as a reviewer, I would be looking to see if the mortgagors could be classed as vunerable individuals - however from what you have told me, they appear to be a little more than that, having sought independent advice before entering into the agreement. And I would argue that this demonstrates they had made due and full consideration of the contractual terms, before becoming party to them.

Was the nature of the contract mis-represented, are the terms that are being imposed, those that were entered into ... I would wager yes .. but doesn't harm to check it out.

I am struggling to see why they, after taking indepent advice, they proceeded with the arrangement, but left the monies sitting in a savings account ? This could be another avenue to argue that the sale was inappropriate to their needs and requirements - as apparently they were not at the time of sale (or subsequently) asset rich/cash poor - which is the usual basis of entering into such an arrangement.

Lifetime mortgage arrangements are indeed designed to be repaid upon death or entry into long term care - but there are situations, which would not have been known to either party at POS. Which means that a sale before such events become known, WOULD NOT on its own make the mortgage sale improper. A mis-sale would be established by a full review of all POS docs, if it was demonstrated that the adviser, having known there was a real possibility of your parents having to exit the contract, earlier than long term care or death issue, simply continued with the sale regardless and without thoroughly discussing early exit fees, or considering other alternative equity release methods. (i.e arrangement of a traditional residential mortgage)

We need lots more info on this .. hopefully the above may help to understand the type of details we need to help.

By the way, a rejection by FOS is far from the end of the road (assume you referred from the adjuicator to an Ombudsman for their final review). As you still have the court route open to you - but I would need to know what exactly they reviewed - and what did the docs state.

Anyway, have a search through all their docs, inc FOS decision and the basis of their rejection, ask Mum & Dad a few q's and come back to us ...

Hope this helps (sorry to those reading for the long post .. but its quite a complex issue !)

Hope this helps

Holly

getmore4less

If you have just got involved you need to review all the material.

Was the claim done properly?
What were the grounds for the rejection

What advice did the IFA give?

looks like there was no need for the money if it was never used.

So what was the purpose of the loan?