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Equity release, is it lawful? Is it fair?
Hi all - i'm new here and its my first post, so go gently.
I have just found out that my father-in-law took out equity release 10 years ago, he borrowed/released £70k and his latest statement tells me that for the pleasure of borrowing the money he now owes £170k. After i picked myself up off of the floor and a good dose of smelling salts i said "how f*ckin much" (thats the tame version, i'm sure you can imagine). Even my rudimentary maths tells me that equates to £10,000 pounds a year interest.
Is it just me? But that sounds like a lot of money. Is it lawful? Is it fair?
What can we do?
I have just found out that my father-in-law took out equity release 10 years ago, he borrowed/released £70k and his latest statement tells me that for the pleasure of borrowing the money he now owes £170k. After i picked myself up off of the floor and a good dose of smelling salts i said "how f*ckin much" (thats the tame version, i'm sure you can imagine). Even my rudimentary maths tells me that equates to £10,000 pounds a year interest.
Is it just me? But that sounds like a lot of money. Is it lawful? Is it fair?
What can we do?
0
Comments
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Yes it's legal. And 'fair' depends on your point of view. I take it loan is paid off when house sold?0
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Yes, the nice loan company will get their pound of flesh when the house is sold. Is there anything we can do to dispute (i mean lower) the interest costs?
If i lent you 70k i'd be happy with 10k interest for the whole term, bit 10k every year?
As you can probably tell i'm absolutely astounded.0 -
(Compounded) interest of between 9% and 10% per year, so hardly loan shark territory.
Is he looking to sell the house now?0 -
It's not £10,000 every year though. Because nothing is being paid then the interest is compounded. It's not payday loan rates. Even a rate of 9% would take £70k to £170k after 10 years (give or take)0
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Silvertabby beat me to it.0
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Hes going to have to sell, he can't afford to stay. Its eating the equity.0
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Does he want to sell, why is the reducing equity an issue for him?0
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It just seems such a lot of money, borrow 70k, pay back 170k. I think i'm in the wrong line of work.
Thanks for the replies though.0 -
If it helps, there should be a 'cap' on the amount due so it can't ever exceed the value of the house.
If so, he can stay in his home for as long as he wants - but there may not be much equity to leave to his heirs.0
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