Mid selling of equity release

Robert_King

I have just been give POA on my mother. 

I’m sorting out her finances and found that 22 years ago she took equity from the house and received a lump sum and a regular monthly payment.

It turns out that she sold the freehold of the house and leased it back for as long as she remains there.

It’s equated to 70% of the value. She has received in total about £45,000 to date in a property that is now valued at £350,000

Meaning that, if she has to go into a care home (likely) the house will be sold at the companies valuation and she will receive 30% of the proceeds, less legal fees etc determined by the company.

Has anyone had a similar experience and can advise?

Thanks in anticipation

Robert_King

Should have been Misselling

Aylesbury_Duck

Ho do you know it was mis-sold?  Was your mother in a fit state to agree to the contract 22 years ago or is it that you're more bothered by the unexpected increase in the value of the property?  As far as I know, that's why these schemes are attractive to the equity release company.

If you really believe the scheme was mis-sold, you'll need to gather all the evidence and speak to a solicitor.  I doubt anyone on here is going to be able to give anything other than an uninformed or semi-informed opinion.  

davidmcn

Probably better on the Mortgages board, but what makes you think it was missold? 

Undervalued

Robert_King said:

I have just been give POA on my mother. 

I’m sorting out her finances and found that 22 years ago she took equity from the house and received a lump sum and a regular monthly payment.

It turns out that she sold the freehold of the house and leased it back for as long as she remains there.

It’s equated to 70% of the value. She has received in total about £45,000 to date in a property that is now valued at £350,000

Meaning that, if she has to go into a care home (likely) the house will be sold at the companies valuation and she will receive 30% of the proceeds, less legal fees etc determined by the company.

Has anyone had a similar experience and can advise?

Thanks in anticipation

But what was the market value of the house 22 years ago?

Suppose she had sold the house then, invested the money safely and rented a similar property would she have 30% of £350K left in her bank account now? I rather doubt it!

I am not a lover of equity release schemes in most circumstances but, as these things go I would have thought she has done reasonably well out of it.

When I bought my current house 37 years ago it cost me about one seventh of its current value. Although I have kept it reasonably well maintained it has had no significant improvements or extensions in that time so that reflects the growth in property prices in the city where I live. However that is all theoretical unless I sell it!

lincroft1710

Coincidentally I bought my home 22 yrs ago, it is probably worth 4 times what I paid for it.

I too am no fan of ER but they have given your mother an income for 22 yrs. They took a risk that house prices would rise in order for them to make a profit.