Lifetime Mortgages

Jessenerboy

Hi I'm new to this and am looking for anyone who has or who's parents have taken a Lifetime Mortgage out with Aviva then not realised that you/they may live for years and the enormity of the end payback, unbeknown to me my parents did this over ten years ago to see their grandchildren enjoy some money and are now looking at paying back to date over £270k, with a £60k early repayment fee, has anyone got any help on how I can reduce this, my parents are now in their 90s and now the realisation is making them ill with worry.

ACG

Is it not limited to the equity in the property?

AnotherJoe

What is the worry ? That there will be no equity left ? They've enjoyed their house for years without financial trouble, seems like a good trade off to me.
You also might wish to reread your original post, you seem to think it's a problem that the grandparents lived for a long time !? As one myself I can state conclusively that I don't see that as a problem.

dunstonh

Nothing to worry about. Your parents have had the benefit of the money and the Aviva product is quite good. What is the cap limit for the equity?

missbiggles1

Jessenerboy wrote: »

Hi I'm new to this and am looking for anyone who has or who's parents have taken a Lifetime Mortgage out with Aviva then not realised that you/they may live for years and the enormity of the end payback, unbeknown to me my parents did this over ten years ago to see their grandchildren enjoy some money and are now looking at paying back to date over £270k, with a £60k early repayment fee, has anyone got any help on how I can reduce this, my parents are now in their 90s and now the realisation is making them ill with worry.

Why would they need to pay back a lifetime mortgage?

AnotherJoe

Ah, I think I read the original too quickly. So the GP's did this to give some money to the grandkids and not to support themselves? Well, hopefully if the kids spent it on something long term like a house deposit, that has paid back well in terms of them getting on the housing ladder, appreciating from the boom in house prices in most areas, and living in their own houses for ten years.

I dont understand why they are ill with worry though? Its not going to affect them is it, they dont need to pay it back surely? Thats why its called lifetime.

If they are worried about the inheritance being eaten up, well they borrowed that from their future selves 10 years ago, dont see what you can do about that now unless it is possible to buy it out and thats a simple maths sum you can do. But sounds unlikely to be plausible you;d be borrowing presumably £340k?

jamesd

Jessenerboy wrote: »

Hi I'm new to this and am looking for anyone who has or who's parents have taken a Lifetime Mortgage out with Aviva then not realised that you/they may live for years and the enormity of the end payback, unbeknown to me my parents did this over ten years ago to see their grandchildren enjoy some money and are now looking at paying back to date over £270k, with a £60k early repayment fee, has anyone got any help on how I can reduce this, my parents are now in their 90s and now the realisation is making them ill with worry.

There's no reason to worry.

The product is fine, it seems to be acting exactly as expected, letting them obtain the benefit of the money while they were able to enjoy it and before they are dead and unable to enjoy it any more.

There is no need to pay back any standard equity release mortgage that follows the usual industry guidelines and there is a standard guarantee that the amount owed will never be more than the value of the property. Normal repayment method is sale of the property once both are dead or in long term care.

If you have some particular attachment to the property you could consider buying it off them, if they wish to sell.

Best for them to simply relax and know that it's doing just what is expected and what they signed up for. They have had a longer than average lifetime so far and that's great even if it does mean that the amount owed has been increasing for longer than average. It'll still be there increasing but only up to the cap even when they are 110 or 120 if they get there.

It is worth checking that this product does follow the usual industry standards but little doubt that a product from a reputable provider like Aviva will.

It's also possible that the product allows things like optional interest paying instead of rolling up the interest, so checking the available product features may be useful.

The bigger challenge is perhaps for you or others who might have been planning to inherit some of the property value. It'll be important that you hide any disappointment over them making good use of their money even if it harms your own possible finances.

AnotherJoe

On their website they state these two guarantees. You can check if they applied to the policy your parents took out, that shoudl ease their worries.
No negative equity

We offer a ‘no negative equity guarantee’, so you don’t have to worry about leaving debts to your loved ones. You’ll never have to repay more than the money received from the sale of your property, provided it is sold for the best price reasonably obtainable.
Inheritance guarantee

A lifetime mortgage will always reduce the amount of inheritance you can leave. But, we know how important is is for you to have the option to leave something for your loved ones, so we offer an inheritance protection guarantee that lets you safeguard a percentage of your homes value. Please bear in mind that this will reduce the amount you are able to borrow.