Aviva Equity Release

Stephen-k

A friends Father passed a way last year. He took out an equity release loan in the early 2000's with Aviva. To pay this loan off the family now have to pay £180,000 plus interest which is accruing to Aviva at £37/day since his death.
I am hoping you might be able to help me with a couple of questions.
My questions are ;
Is it fair that interest is being charged ?
Would it be required by Aviva that he should have some kind of insurance to cover the Equity Release before the loan was given?
thank you

Westminster

No blame, no claim.

Thrugelmir

Stephen-k wrote: »

Is it fair that interest is being charged ?
Would it be required by Aviva that he should have some kind of insurance to cover the Equity Release before the loan was given?
thank you

Your late friends father entered into the contract. They considered the terms fair. No grounds to dispute now he has passed away.

The whole point of equity release is to benefit from and enjoy the money tied up in the property. Is the borrowers responsibility to consider those that are left behind.

Comes as a shock to many that there's no inheritance. That's families for you.

-taff

Stephen-k wrote: »

Would it be required by Aviva that he should have some kind of insurance to cover the Equity Release before the loan was given?

The house was the insurance.....

robber2

Stephen-k wrote: »

To pay this loan off the family now have to pay £180,000 plus interest

No they don't , the friends fathers estate is resposible to dealing with any outsatnding liabilities.

Rob

Silvertabby

The family won't have to pay anything. If his estate is less than the amount due (unlikely), then the outstanding debt will be written off.

dresdendave

Silvertabby wrote: »

The family won't have to pay anything. If his estate is less than the amount due (unlikely), then the outstanding debt will be written off.

The above is correct, however the family probably (incorrectly) think of all the deceased's assets as now being theirs and any liabilities is "their" money being taken away from them.


They need to change their mind-set and accept that "their" money is the residue of his assets after all debts have been cleared.


Perhaps they might even be pleased that their father was able to raise money against the house he no doubt worked hard to pay for, allowing him to enhance his standard of living in his later years?

Stephen-k

Thank you for your comments although one or two did seem to drift off topic a little.
The family is not quibbling about paying Aviva or upset they will not get any inheritance far from it the man was very generous in his Will and his Estate will easily pay off Aviva.
Perhaps it was my fault but I did not want to go into too much detail in my question should any member of the family read it and find it upsetting.
The impression these days is that we are surrounded by large conglomerates that only want to bleed us white for our money.
I have done some research but found little on companies who charge interest illegally, it might be known as compound interest I am not sure.
And my hope was that the good people here may have some knowledge of such companies and that may include or not Aviva.
And was it a requirement to take out insurance on such a loan.
!!! Taff stated,"The house is the insurance" was that always the case ? Was there something along the lines of PPI for Equity Release back in the day that now is illegal ?
My friends Father was a stickler for insurance, he even insured his cat ! (seriously he did) I don't want my friend to find out too late that there was a policy taken out and some large company withheld that information to maximize profit.
I do appreciate the time you have given to reply to my post. I just want to be able to walk away from this situation knowing I tried my best for my friend.

sourcrates

Hi,

The way equity release works is the company provide a lump sum of cash, based on the value of the house.

Most people who take out equity release use a lifetime mortgage. Usually you don’t have to make any repayments while you’re alive, interest ‘rolls up’ (unpaid interest is added to the loan). This means that the debt can increase quite quickly over a period of time.

However, some lifetime mortgages do now offer you the option to pay all or some of the interest, and some let you pay off the interest and capital.

In the same way that ordinary mortgages vary from lender to lender, so do lifetime mortgages.

When you die, your house (the collateral for the loan) is sold to repay the debt.

The product has a “no negative equity guarantee”. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.

AnotherJoe

Stephen-k wrote: »

Thank you for your comments although one or two did seem to drift off topic a little.
The family is not quibbling about paying Aviva or upset they will not get any inheritance far from it the man was very generous in his Will and his Estate will easily pay off Aviva.
Perhaps it was my fault but I did not want to go into too much detail in my question should any member of the family read it and find it upsetting.
The impression these days is that we are surrounded by large conglomerates that only want to bleed us white for our money.
I have done some research but found little on companies who charge interest illegally, it might be known as compound interest I am not sure.
No, you clearly aren't. . He borrowed money on the grounds the interest would accumulate and would be repaid upon death / sale of house. If it didn't accrue, Aviva would have lent someone money at an actual interest rate of practically zero. And why would they do that ? Then father would have had to downsize and move out of his house as the only way of benefitting from the house he owned..

And my hope was that the good people here may have some knowledge of such companies and that may include or not Aviva.
And was it a requirement to take out insurance on such a loan.

The person who said the house was the insurance, wasn't joking, that's how it works.
!!! Taff stated,"The house is the insurance" was that always the case ? Was there something along the lines of PPI for Equity Release back in the day that now is illegal ?

This seems to me to you wanting to have your cake and eat it. If there was insurance other than the house, do you now want that to be made illegal but yet get the benefit of it? It's pretty much guaranteed when you take ER out it will be repaid by selling the house, that's how it worked.

My friends Father was a stickler for insurance, he even insured his cat ! (seriously he did) . Many people insure their pets. Thats hardly ground breaking or unusual,

I don't want my friend to find out too late that there was a policy taken out and some large company withheld that information to maximize profit.
The policy was the ER and the insurance was the house. Otherwise it would be like taking out insurance on insurance. And at his age, a life insurance policy would almost certainly cost more than the income from the released equity, so being self defeating, it would be the equivalent of perpetual motion. He sounds like an organised gent who would have left all papers and documents accessible, no doubt they haven't found any such policy...

I do appreciate the time you have given to reply to my post. I just want to be able to walk away from this situation knowing I tried my best for my friend.

Seems like father did his best, came up with a great way of releasing money to enjoy in late age yet still ensured relatives had money when he died. Don't try to diminish his efforts by making out he was defrauded.

AnotherJoe

p.s. As its New Year, I thought I'd try a little haiku

father passes, relatives complain
he had his house and money too
they want his cake and eat it, also