Repay/Pay Off Shared Appreciation Mortgage (SAM mortgage) loan?

DB042

I have been looking but I cannot find much information on this:
My partners father (reluctantly) took out a SAM back in the 90s with Royal Bank of Scotland.  He never liked having this loan over his head and has always wanted to pay it off.  He has come into some money recently from another investment and wants to use it to pay off the original loan.  To be absolutely clear, he is not selling the house, he just wants to pay off the original loan amount, plus any interest.  Does anyone have any experience with doing this for SAMs?

molerat

Equity release from the days of the wild west !

https://www.saga.co.uk/money/equity-release/articles/dangers-of-shared-appreciation-mortgages

Should not be a problem paying it off but on top of the loan and any interest he may also have to come up with up to 75% of the increase in value of the property - the shared appreciation bit.

Has he read the paperwork for the redemption clauses ?

Does he know the value of the property then and now ?

DB042

He really doesn't want to pay the shared appreciation part.  And he has undiagnosed dyslexia, so he relies on others to help him understand paperwork, so he probably never read it properly himself.  Plus we can't currently find the original paperwork (he's not the best at organisation) to review it for him.  If / When we find it, we'll be sure to check for the redemption clauses.

As for the value, the original was about 90k (according to RBOS at the time) and now it's about 400k.(based on other properties sold in the area).

DB042

He also just recently told us that he refused to take the loan when he saw the paperwork was with RBOS.  But the guy that sold it to him, told him he couldn't refuse it once he had asked for for it.

This seems questionable and even more "Wild West".

fwor

DB042 said:

Plus we can't currently find the original paperwork (he's not the best at organisation) to review it for him.  If / When we find it, we'll be sure to check for the redemption clauses.

I think you're looking at this the wrong way. The documentation is absolutely critical, and if he wants to get out of paying them what they say they are due, he/you need to find a copy of what he signed up to. You won't make any progress without that paperwork.

Has he tried contacting RBOS to ask for a copy of the contract documentation?

DB042

fwor said:

DB042 said:

Plus we can't currently find the original paperwork (he's not the best at organisation) to review it for him.  If / When we find it, we'll be sure to check for the redemption clauses.

I think you're looking at this the wrong way. The documentation is absolutely critical, and if he wants to get out of paying them what they say they are due, he/you need to find a copy of what he signed up to. You won't make any progress without that paperwork.

Has he tried contacting RBOS to ask for a copy of the contract documentation?

He is fine paying them back the original loan.  It's just the appreciation part he wants to avoid.
Good idea though, I will suggest that he contact them for a copy of the paperwork, so we can review it. Thanks.

Nebulous2

I don't think this is going to end well - but you/he could always submit a SAR to get everything they hold on him. 

fwor

I can't see it ending well either.

DB042 said:

He is fine paying them back the original loan.  It's just the appreciation part he wants to avoid.

That's a bit like saying to your bank that you don't mind paying back the loan but you don't want to pay any of the interest. One of the reasons why that type of mortgage looked attractive was that the appreciation part subsidises the whole deal. He would not have got such a cheap loan (in straight interest charges) if it were not for the "share of appreciation" part.

By all means look at the documentation - when you get hold of a copy - but please don't expect some gaping hole in the Terms and Conditions. This was prior to regulation of that type of loan, so you're not likely to find an easy get-out clause, IMO, and RBOS is not the type of organisation to have written a poorly thought-out contract.

silvercar

Some cases of SAM were referred to the ombudsman:

https://www.financial-ombudsman.org.uk/files/2907/72.pdf

silvercar

I'm going to ask the forum team to move this thread to the mortgage board where there should be more visibility from those that know more about mortgages.

Edi81

I always thought it was just Bank of Scotland and Barclays that offered SAMS. First I’ve heard of RBS offering the product. 

If you are going down the SAR route go
to both banks just in case.