Aviva Endowment Loan 31 January at 1:47PM in Mortgages & endowments 4 replies 137 views

74Tigersqn

Hello Everyone.

I really hope someone help me??

I am emailing on behalf of my 87yrs old Father.

In Jan 2005 my Father took out an "Lifetime Mortgage loan" for £30.000 for home improvements. At the time of this my parents had already paid off their mortage, so this is what is now called "equity release"

At the time of this, my Father wasn't advised onto how much the repayments would be? or how much the interest would be etc. So as I understand, he was lead to believe that the amount of £30.000 would be taken off from the sale of the property, or in the event of their passing.

The loan/equity release was taken out with Aviva.

Regards

Wayne

DullGreyGuy

74Tigersqn said:

In Jan 2005 my Father took out an "Lifetime Mortgage loan" for £30.000 for home improvements. At the time of this my parents had already paid off their mortage, so this is what is now called "equity release"

At the time of this, my Father wasn't advised onto how much the repayments would be? or how much the interest would be etc. So as I understand, he was lead to believe that the amount of £30.000 would be taken off from the sale of the property, or in the event of their passing.

The loan/equity release was taken out with Aviva.

And your question is?

I'm sure your 70 year old father who decided to take out the loan didnt think it was interest free for life. 

If its a lifetime mortgage then there is no repayment until they die or go into long term care. 

74Tigersqn

If "there is no repayment until they die" how come this loan has doubled in price?

dunstonh

At the time of this, my Father wasn't advised onto how much the repayments would be? 

Not sure what the question is but as there are no repayments with a lifetime mortgage, he wouldn't be advised what they are.

 or how much the interest would be etc.

Knowing the paperwork that exists on these and it being post regulation, he would have been told.  His solicitor would also have gone through it with him

So as I understand, he was lead to believe that the amount of £30.000 would be taken off from the sale of the property, or in the event of their passing.

So, he thinks that a lender, Aviva in the case, was going to give him £30,000 for 20-30-40 years and he wasnt going to pay any interest on that loan?     Nothing in the documentation would even come close to hinting that.  At age 87, it is more likely his memory is playing tricks.

If "there is no repayment until they die" how come this loan has doubled in price?

Interest on the loan,

DullGreyGuy

74Tigersqn said:

If "there is no repayment until they die" how come this loan has doubled in price?

Because if you dont repay a loan the interest continues to compound until you do.

Lifetime mortgages normally have a no negative equity clause and so ultimately its a gamble by the insurer against both longevity and house prices. Whilst your father was 70 when he took the loan you can get one at age 55 which in theory someone could go on to live over another 55 years from that date owing a debt continuing to accumulate interest.