Equity release lifetime mortgage

Asetright

Hello, 
My mother in law took equity release of £30,000 on her property 15 years ago. The term was 20 years so it will finish in 5 years time. The total amount to repay then will be £90,000. We have spoken to the lender to see what happens after the loan period finishes. The interest at 5% will continue to accrue. She is 82 years old and in good health so could live for many years. Is there any alternative to continuing to pay this interest? We could pay off the loan amount but fear we would lose this if she has to enter long-term care. We'd prefer to release more equity to allow her to enjoy the value of the property rather than continue paying thus interest. Could we get another, lowercrate loan to pay this off and release more equity? Property is worth approximately £200,000.
Thanks in advance. 

MWT

Generally a Lifetime Mortgage would not have a term, it just keeps running until death or entering long term care of the last life on the mortgage. She may have had an illustration showing how the loan would roll-up over 20 years but that was not a 'term'...

At age 82 with a house valued at £200k she might be able to access a total of around £110,000 if she went for a new Lifetime Mortgage given you say her health is good for her age.

I am assuming that £90k figure includes an ERC if it was £30k at 5% for 20 years, so if the full settlement figure is £90k at 20 years then taking a new product now could both reduce the interest rate a bit and free up probably £35k or so at a likely current settlement figure..

Do take care though as at her age there is a risk that taking further equity out of the property could be seen as deprivation of assets if her circumstances change and she needs long term care in the near future.

Sounds like you have other options too if you are contemplating paying off the mortgage for her, I'll leave those for someone else to comment on...

Edit: made some changes as the quoted settlement figure is at 20 years not the current 15 year point.

dunstonh

My mother in law took equity release of £30,000 on her property 15 years ago. The term was 20 years so it will finish in 5 years time. 

What you describe sounds like a mortgage rather than equity release.  Equity release typically has no redemption date. i.e. it is open ended.

 The total amount to repay then will be £90,000. We have spoken to the lender to see what happens after the loan period finishes. The interest at 5% will continue to accrue.

However, that doesn't sound like a mortgage as lenders would expect repayment.  

 Is there any alternative to continuing to pay this interest?

Repay the loan.

 We could pay off the loan amount but fear we would lose this if she has to enter long-term care. 

Every option has pros and cons.

We'd prefer to release more equity to allow her to enjoy the value of the property rather than continue paying thus interest. Could we get another, lowercrate loan to pay this off and release more equity?

yes