Equity Release Lifetime Mortgage

Bluesindy

Hello there, I was just wondering if anyone out there had any experience of the above. My mother has just had her latest statement from such a product and from the initial £25k she released the total amount now owing is a whopping £63.5K. The interest rate at that time was 7.55%. My sister and I are looking into ways to get rid of this but the most annoying thing is that they are asking for £7,600 in early repayment charges!!!!!! Obviously we've got some delving to do and I havn't seen the original paperwork yet, but I was hoping maybe someone can share their experience on these products. Many thanks in advance.

holly_hobby

Unless the terms of the product were mis-represented, or your mother would have been classed as a vunerable individual at the ponit of sale (ie elderly, or known cognaitive imparement or disability preventing her from understanding the basics and basis of the agreement), then she has entered into a contractual arrangement of which the terms of non-negotiable.

Lifetime mges are typically repaid upon entry into longterm care or death, early redemption pens can be weighty with these schemes, but unless the mge T&Cs do not mention this, or mis-represent how any ERCs are calculated, then it is what it is I'm afraid.

Lifetime mges are a solution for some peeps, where they are asset rich but cash poor, but need careful consideration of all associated factors to ensure that all aspects of the arrangement (not just receiving a capital sum without the requirement for affordability assessment or monthly repayments) are suitable.

Check the t&cs over and come back if needed.

Hope this helps

Holly

Bluesindy

Thanks Holly,

I need to read through the original docs and make sure I've got all the info to hand, it's certainly a hefty penalty but I fear they may have just gone to one company rather than seek independent advice. I'll post back with any more info.

holly_hobby

To be fair, they are hefty with all LTM providers, nature of the beast I'm afraid.

Pop back if after examining the docs, if things aren't as they should be.

Holly x

TrickyDicky101

Bluesindy wrote: »

...but I fear they may have just gone to one company rather than seek independent advice. I'll post back with any more info.

This is directed towards Holly rather than the OP:

I thought Equity Release had to be 'sold' via an advised channel (eg IFA) and couldn't be bought directly from a provider?

Am I completely wrong in this assumption?

holly_hobby

Yes Dicky,

As a professional, I have always advised that the individual and their family engage a qualified WOM ER adviser from outset, BUT previously there were various providers whom allowed direct access (ie no requirement for intermediary introduction), although new recommendations come via authorised channels - to which I am assuming this was an EO/non-advised sale.

Even if this was originally an advised sale, the ERCs are a contractual term, much as we see with straight residential mges - and unless it was made clear by the mortagor that they would likely want to redeem pre death or entry into LTC, then the sale (re ERCs) wouldn't necessarily equate to a mis-sale (ie an unforseen change in circs, now requiring early redemption, wouldn't equate to poor advice re the POS discussions and recommendations).

Poor advice from an advised sale would be such things as, if the ER was for low income, not investigating all available sources of income such as unclaimed pensions, and any eligible benefits - which may completely negate the need for a LTM arrangement.

Or, if the individuals were on any MT benefits, explaining how any equity release may effect their eligibility or level of benefit ... or simply recommending sale and downscale of home ..... you get the idea.

Regarding arguing over ERCs, they would (should) have been clearly identified within the contractual docs and illustrations, if not or the amount/or how ERCs were calculated were not clearly identified in plain english, or the mortgagor is classified as being unable at POS to understand the nature of the contract, there may be a opening for discussion with the provider

Hope this helps

Holly

TrickyDicky101

Thanks Holly.

holly_hobby

No probs x