Discharge fee Extra Income Plan

gorillagirl

Selling inherited leasehold flat which had equity released in 2000 through an Extra Income Plan. I understand that the sum assured is now gaining interest until paid back but am unsure of any other fees as there is very little information. The plan has changed hands over the years and is now with Newcastle Building Society. The flat is about to be sold so I need to engage a coveyancing solicitor before Monday. When asking for quotes I inform them that the property is leasehold and there is a form of equity release needing to be paid back when sold. One quote mentions a charge of £350 for discharge of equity release. Is this normal practise or should we be dealing with it ourselves? I am waiting to hear from Newcastle BS but need clarification today so I can engage a solicitor.

eddddy

The Equity Release will mean there's a charge on the property. As you're selling the property, it's much simpler to let the conveyancing solicitor deal with repaying the equity release and removing the charge.

(If you were keeping the property, and you weren't in a rush to get the charge removed, maybe you could deal with paying off the equity release yourself.)


But dealing with an Equity Release should be no more complex than dealing with a mortgage for your solicitor. Most solicitors just quote a single fee for doing all of that.

So maybe one solicitor's quote splits it out as 2 separate items, but the others quote an inclusive figure for doing everything. But maybe it's worth double-checking that before accepting a quote.

GDB2222

Look at the total fee, and don’t worry about the breakdown? Obviously, make sure that you are comparing like with like. 

If you simply choose the cheapest quote, don’t be surprised if the service is poor. They should do all the basics properly, but communication may be sporadic. 

user1977

This is definitely your solicitor's fee rather than the lenders' own fee (which isn't going to be avoidable)?

In the context of a sale it's not really feasible to DIY the discharge - the buyer will need your solicitor's undertaking that the loan is being redeemed and the discharge registered, which your solicitor can only provide if they're dealing with it themselves - nobody's going to trust you to do it.

gorillagirl

Thank you I'm a bit confused by the title of the equity as it is called Extra Income Plan does it amount to the same thing?

GDB2222

gorillagirl said:

Thank you I'm a bit confused by the title of the equity as it is called Extra Income Plan does it amount to the same thing?

Probably. The capital raised by equity release was often used to buy an annuity.

eddddy

gorillagirl said:

Thank you I'm a bit confused by the title of the equity as it is called Extra Income Plan does it amount to the same thing?

It may be the same - "Extra Income Plan" sounds like the name of a product. It could be an equity release product.

For example, a company called NPI used to sell an equity release product called "Extra Income Plan" - I believe they've been taken over by Phoenix Life.


As an aside, was your parent's plan from NPI / Phoenix Life? There's a few people complaining that they were poor value. 
For example: https://sivconsultants.com/equity-release-firm-made-400pc-gain-on-home/

Have you found out how much you will owe the equity release company when the property is sold?

GDB2222

eddddy said:

gorillagirl said:

Thank you I'm a bit confused by the title of the equity as it is called Extra Income Plan does it amount to the same thing?

It may be the same - "Extra Income Plan" sounds like the name of a product. It could be an equity release product.

For example, a company called NPI used to sell an equity release product called "Extra Income Plan" - I believe they've been taken over by Phoenix Life.


As an aside, was your parent's plan from NPI / Phoenix Life? There's a few people complaining that they were poor value. 
For example: https://sivconsultants.com/equity-release-firm-made-400pc-gain-on-home/

Have you found out how much you will owe the equity release company when the property is sold?

People forget, or don’t properly understand, the effects of compound interest over long periods. The lenders appear to have charged a fixed rate of interest of around 7%. Whilst that is high by present standards , it was probably the going rate back in 2000. 

That interest was not paid, but was added to the amount borrowed. Hence, it’s inevitable that the original £19,000 borrowed has escalated to something like £80,000 over the 20 years. 

I hope the uncle who took out the loan enjoyed spending the money, and hopefully he did not worry too much about his grieving relatives. 

GDB2222

Just checked, and the interest rate that the government was paying on 10 year loans that it borrowed back in 2000 was over 6%.  So, charging a retail customer 7% does not seem at all unreasonable. 

gorillagirl

Yes it was NPI which went on to be Pheonix Life for stipend and Nationwide Building Society for the lump sum assured which is to be repaid with interest after death. The only information is the original pack from 2000 and lots of statements. As far as we can understand, it is the sum assured plus 2.5% from date of mum's death. Hope this is correct!

theartfullodger

Have been through similar recently I was stuck by how evil and blood-sucking the interest rates were.  And wondered if the terms agreed to by borrower (my late brother) could be enforced on estate/beneficiaries 

Such schemes "extra income" or "fairy dust" exploit the vulnerable.