Shared equity loan ..Scotland 1990's

Pudsydrums1

My parents took out a small 5k shared equity loan  their property circa 1995 to help with costs ( I don't know why they didn't add to the small mortgage they had) the repayment was 15% of sale price .
Both parents have now passed away and this arrangement has come to light . 
The company did write approx 9 years ago and asked if they wanted to settle but my Dad had been diagnosed with a terminal condition so decided against . As it stands the builder will obviously 30k approx .. 
My question is ....were these deals legal or were they misold this or do we just have to suck it up ... 
Kind regards 

user1977

Did the £5k equate to 15% of the original property value? If so, it sounds fair enough to me?

I'm not aware of any "misselling" concerns about this sort of thing, and your parents presumably had the benefit of independent legal advice at the time.

silvercar

You could always ask the lender for a settlement price now.

Pudsydrums1

To my knowledge the 15% is on the selling price now ..i.e house approx value 200k 

Pudsydrums1

Apologies , the 5k was basically just a loan they took out for carpets etc house was about 70k circa '95

user1977

Pudsydrums1 said:

Apologies , the 5k was basically just a loan they took out for carpets etc house was about 70k circa '95

Ok, you'd normally expect the percentage to be the same (so e.g. about 7% if it was £5k out of £70k). But like I said, if it's what they signed up to then I don't see any argument available now, it wouldn't have been something regulated as far as I know.

MWT

Was this a Bank of Scotland Shared Appreciation Mortgage (SAM)?

Just trying to make sure you are looking at the right numbers, as the calculation of the return to the lender was a bit more complicated than just a straight percentage...

If it was a home reversion product then it is a simple percentage, but 15% is a low number for home reversion products...

Pudsydrums1

Thanks for your help ... That was pretty much my thoughts but just wondered if anyone had previous experience with this situation . 

Pudsydrums1

The only info I've found makes it look like a contract with the builder , they appear to have set up another company which maintains these deals 

MWT

Pudsydrums1 said:

The only info I've found makes it look like a contract with the builder , they appear to have set up another company which maintains these deals 

Was this a new house purchase at the time? ... I'm not sure how the builder would have got involved otherwise?

Either way, it doesn't sound like you have any indications that there has been any mis-selling, and it is certainly worth asking for a settlement figure from the builder's company then you can see if it looks any better than simply selling and giving them their share.

Obviously a matter for the executors of the estate. 

Pudsydrums1

Yes , new house .
Ok thanks in the meantime .