Equity Release

Parentsindispair

Hello, My parents took out Equity Release over 10 years ago for a sum of £55k.  My dad is registered disabled and they now need to move into a bungalow as the house is not practical for them anymore.  They had sold their house and was in the process of buying a bungalow.  Equity Release had valued the new property at the same value as their current home.  Initially Equity Release wanted £17k from them to port over.  After that shock, they managed to borrow some money from a relative in order for them to continue with their purchase of the bungalow.  My dad is not in the best of health and my mum is not great either with all the stress of her own health issues and those of my dad, to then be told by the Equity Release they have put the fees up to £28k, with no real explanation of why.  Both parents are now really struggling and this has really hit especially my dads health and his mental health.  He now doesn't want to continue living as he feels trapped and cant cope with the house they are in.  He has now taken to bed and wont get up or has no interest in his life.   This has really had a  massive impact on them both and I have no idea how to help, as I don't have the money to help out. My mum is trying her best to keep going.  They are both trapped in the house that they so desperately need to downsize with also showing signs of early dementia, constantly falling over and depression.  I really could do with some advice on what to do and where to go.  Thanks 

tacpot12

I think the first thing to do is to get to bottom of whether the fee increase is legal. I would start by asking your Mum to authorise you to discuss the situation with the equity release provider. She should be able to do this over the phone. She should make it clear that this is a indefinite request to them - i.e. they should discuss your parent's product and account with them at all times in the future upto the point when your parents consent is withdrawn. If they want your father to agree, you may have to try to get him to the phone, or send them a letter than he can sign. 

I think you also have to hold out that there is hope to your Dad so that he thinks that something may be possible.

Then ask them why the fees are increasing and what part of the contract allows them to increase the fees. (You also need to get clear what the fees are for, and whether they might increase again.) 

They may have been missold the Equity Release. They will need a financial advisor that can review the situation - your aim should be to gather as much information about how they bought the product, and the product terms and conditions, so that the advisor can review things quickly. 

I think you should also consider getting Power of Attorney's for both your parents now, if they will grant you them, and if you think they have capacity to grant a Power of Attorney. To have capacity, they have to understand what power they are giving you, and understand the implications of this. To get a Power of Attorney, they will need a Certificate Provider, who would ideally be someone who has known them well for a long time. If you can figure out who might be a good candidate to be their certificate provider, you can talk to them to see if they are prepared to act in this role (it's a simple, one-off job, the bulk of the work being writing out their name and address repeatedly.) Once you know who the Certificate Provider is going to be, you can involve them in assessing whether they have capacity. If you are lucky, your parents will have friends who have already made PoA, or know of friends with dementia where not having a PoA has proven to be a problem. The relative that offered them money might be a good candidate in that they already know the situation, and considered them to have capacity to accept a loan.

Don't delay on this. The Office of the Public Guardian, which validates PoAs, is currently taking about 20 weeks to do so!

eddddy

Have you looked through the calculations to see what the £17k and £28k relate to?

Are they really just an "arrangement fee" that goes  the Equity Release company?

Or are they perhaps something like the total costs of selling/buying? And perhaps, for example, the £17k didn't include the SDLT, but the £28k did.