retired and still have a mortgage

izzybella_2

Hi,
Hoping someone will be able to advise:j My parents were given an interest
only mortgage in 1990 but the company did not recommend any endownments etc as both parents were nearing retirement. My Father was
63 and my Mum was 59 years. They are both very much alive and fit and
well now nearing 80 and 76 years;) . They only borrowed a relatively small amount but over the years that has incresed by about 50% and another letter has just advised them of another hike in interest rates and costs!!
I really do not know why this type of mortgage was offered, I can only presume that because of their age perhaps life expectancy was an issue and
obviously the mortgage would be repaid from the sale of their house however
is it not a bit presumptious of the building society to think like this?? My Mum & Dad will I am sure will live for a lot of years to come and yet here is a building society making a lot more money than the original loan value. Surely
this cannot be legal?? Can anyone advise us as to what they may do??

kind regards
Izzy

dunstonh

Have you asked your parents why they approached the building society asking for a mortgage?

You say it is an interest only mortgage. Is it an interest only mortgage with an redemption date or is it an equity release style mortgage?

They only borrowed a relatively small amount but over the years that has incresed by about 50% and another letter has just advised them of another hike in interest rates and costs!!

Totally correct. As has everyone else's mortgages. Mortgage rates are near double what they were a few years ago. That is normal.

is it not a bit presumptious of the building society to think like this??

Depends on what your parents asked them to do. It is probably an equity release mortgage in which case, the lender did as they were asked. A solicitor would have been involved as well. You say your parents are very much alive and fit now so they there can be no question over their ability to understand it 17 years ago.

My Mum & Dad will I am sure will live for a lot of years to come and yet here is a building society making a lot more money than the original loan value. Surely

That is the idea of a loan. Lenders give you money on which they expect to be paid the original loan plus interest. If there was no interest, there would be no reason for them to lend the money.

Surely this cannot be legal??

Lending is quite legal. Just look at how much lending goes on nowadays.

Can anyone advise us as to what they may do??

You need to research more about the type of mortgage and discuss it with your parents. Perhaps they didn't want you to know that they had to rely on an equity release back then. It used to be frowned upon as an option you did when you didn't have enough money and there was a bit of a stigma attached to it. So, they may have been embarrassed to tell you. Are they who are concerned about this or is it something you have picked up and you are concerned about?