Aviva Equity release / Lifetime mortgage

Chime

Please can someone advise us about this issue.
In 2001, my parent took out a lifetime mortgage of £46,000. Currently in 2025,  we now owe them £284,000 roughly, this to me and everyone we speak to, seems absolutely immoral and ridiculous, that it can be this much to pay back. There is interest and there's interest! Is this legal?

HappyHarry

Charging an interest rate of just shy of 8% per year is perfectly legal. This figure can be expected for an equity release mortgage taken out in 2001.

Hoenir

Yes it's legal. Was your parents decision to withdraw the equity from the property and one presumes spend it. 

TheSpectator

Chime said:

Please can someone advise us about this issue.
In 2001, my parent took out a lifetime mortgage of £46,000. Currently in 2025,  we now owe them £284,000 roughly, this to me and everyone we speak to, seems absolutely immoral and ridiculous, that it can be this much to pay back. There is interest and there's interest! Is this legal?

It's legal and none of the things you seem to think it is.

The whole point of these arrangements is that you pay nothing back but the interest accrues and the loan is settled when the property is sold.

The only people that get upset over them are potential beneficiaries who see their inheritance gone.

Keep_pedalling

This is what 24 years of compound interest does. You don’t actually owe them anything, your parents (or their estates) do. How much is the house worth? 

onomatopoeia99

Chime said:

Please can someone advise us about this issue.
In 2001, my parent took out a lifetime mortgage of £46,000. Currently in 2025,  we now owe them £284,000 roughly, this to me and everyone we speak to, seems absolutely immoral and ridiculous, that it can be this much to pay back. There is interest and there's interest! Is this legal?

Crudely calculated the interest rate seems to have been about 6.9% over a term of 24 years, assuming no repayments were made.

I don't know how these products work.  Is the rate fixed and agreed at the start? In Februrary 2001 the Bank of England base rate was 5.75%. 

Chime

Good question, Ill try and find out.

Hoenir

onomatopoeia99 said:

Chime said:

Please can someone advise us about this issue.
In 2001, my parent took out a lifetime mortgage of £46,000. Currently in 2025,  we now owe them £284,000 roughly, this to me and everyone we speak to, seems absolutely immoral and ridiculous, that it can be this much to pay back. There is interest and there's interest! Is this legal?

Crudely calculated the interest rate seems to have been about 6.9% over a term of 24 years, assuming no repayments were made.

I don't know how these products work.  Is the rate fixed and agreed at the start? In Februrary 2001 the Bank of England base rate was 5.75%. 

Easy to forget how much higher borrowing rates were in the past. Only now returning to what might be considered normal levels. 

DullGreyGuy

onomatopoeia99 said:

Chime said:

Please can someone advise us about this issue.
In 2001, my parent took out a lifetime mortgage of £46,000. Currently in 2025,  we now owe them £284,000 roughly, this to me and everyone we speak to, seems absolutely immoral and ridiculous, that it can be this much to pay back. There is interest and there's interest! Is this legal?

Crudely calculated the interest rate seems to have been about 6.9% over a term of 24 years, assuming no repayments were made.

I don't know how these products work.  Is the rate fixed and agreed at the start? In Februrary 2001 the Bank of England base rate was 5.75%. 

Life time mortgages typically have a fixed interest rate, right now Aviva's average MER is 7.13%. Typically higher than traditional mortgages but thats understandable given the fact the lender doesn't receive a penny for potentially 40+ years and all that can happen in the world in that sort of timespan. 

They can also be capped such that it's never put into a negative equity position by the interest. 

Chime

Thanks to everyone who responded on here. To the person who thought I'm only asking because of what inheritance I would miss out on , its not the case. My father has passed and my mum has goin into nursing care. The house has to sold to pay back equity release. Half of the proceeds , will have to pay for mums care. Please don't assume!

Chime

Thanks to everyone who responded on here. To the person who thought I'm only asking because of what inheritance I would miss out on , its not the case. My father has passed and my mum has gone into nursing care. The house has to sold to pay back equity release. Half of the proceeds will have to pay for mums care. Please don't assume!