Equity Release Heartbreak

Cola17

We lost our dad just over a year ago and as our mum has dementia we took over as power of attorney. In May mum had to be moved into a carehome so we have put her home up for sale to cover carehome costs. We found out that in 2005 our parents took equity release with Scottish Widows of just under 35k and the repayment for this at the moment is £112k and rising £600 each month. We are expecting to get around £230k for the sale of mums house which we'd hoped would cover carehome costs for the next few years but with a minimum of 112k going to Scottish Widows this will be tough. While I'm aware this is perfectly legal is it morally correct and are people signing up to these things aware of the gravity of what they are signing. I don't think my dad would ever have imagined the the huge amount of money Scottish Widows would be taking back. If you are considering equity release please think long and hard and consider alternatives. 

Ebe_Scrooge

I'm sorry to hear of your situation.  But it's well-known that the various equity release schemes are incredibly expensive, and the advice on these forums is always to steer well clear.

MEM62

Cola17 said:

I don't think my dad would ever have imagined the the huge amount of money Scottish Widows would be taking back.  

That's the result of 17 years interest on a £35K loan. 

In my opinion, equity release is, in most cases, an appalling product and should only be the last resort of the desperate.    

penners324

Lodge a complaint for misselling?

I assume they've never paid any interest payments on the loan?

lisyloo

You could lodge a complaint, but if the paperwork is in order and your parents signed to say they agreed and understood then you/they won’t win.

its the result of borrowing the money for 17 years.

of course there’s always a chance they’ve slipped up on the records somewhere but it’s going to be a hard slog to claim they didn’t understand it, with neither parent able to give their side of the story.

silvercar

That’s an interest rate of 7%, not unreasonable for what the product is.

do you know what the £35k was used for?

[Deleted User]

penners324 said:

Lodge a complaint for misselling?

I assume they've never paid any interest payments on the loan?

You won't get anywhere with miss-selling, it's way too long ago (6 year and 3 year rules apply), parents of sound mind taking out equity release will have signed all the paperwork showing the cost illustration, particularly after 2005 and why shouldn't they take it out and enjoy the money?

Equity release you don't pay interest on it, it's compounded onto the loan usually up to a certain value and only repayable when either both parents die or go into care that sort of thing

sourcrates

What`s done is done, and once any money you do get back from the sale runs out, your mum should become fully funded by your local council, assuming she has no other assets.

MEM62

penners324 said:

Lodge a complaint for misselling?

Based on what?  

robber2

penners324 said:

Lodge a complaint for misselling?

I assume they've never paid any interest payments on the loan?

thats a stupid suggestion, there is no suggestion or evidence of miselling in the OP.

Quorden

Very similar situation, my Dad passed earlier this year and discovered his equity release agreement. 

I did however negotiate with the provider and Mum signed a new agreement at a less than half the original rate. Appreciate that the world has gone mad and rates have changed significantly since then but may be worth approaching Scottish Widows to see if there is any way to get a new agreement. Can't do any harm.