Equity Release Heartbreak

mjm3346

Quorden said:

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.

That was a good result, but house is being sold so they don't need a new agreement, shouldn't be any exit penalty though

macman

So what has happened to the £35k that was released?

Keep_pedalling

macman said:

So what has happened to the £35k that was released?

Undoubtedly spent on things they needed or wanted, people don’t take out ER to invest it in the stock market, they do it for house improvements, nice holidays, new cars or even a house deposit or their own children.

Keep_pedalling

Cola17 said:

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. 

For people who are asset rich and cash poor the only real alternatives to some form of ER, is to downsize or to borrow from children. The problem with the first is that many people become so attached to their long term home that they refuse to consider it and it only really works if you own a house of high enough value that the the price difference makes it worth while.

Borrowing from children is out for most families, but even where it might be possible, pride gets in the way of asking. ER does come as a shock for people like the OP as most parents would be reluctant to talk about it so it only come out when someone dies or looses their mental faculties.

Humans in general tent to be short termists and if something can be done to sort out an immediate financial need then the long term consequences tend to get ignored, and because you are never going to need to pay it back yourself with ER is very  easy to do.

ER products do fill a need, it is a better option than letting your home fall into ruin or to die with a large amount of equity in your home with no one to leave it to.

Keep_pedalling

To make the available equity last as long as possible the OP needs to make sure everything her mother can claim for is being claimed. Attendance allowance will be available regardless of income.