Rip off Equity Release - is there anything that can be done

helenk1234

My sister's father in law has just died and I am helping her and her husband sort out his estate. They knew he had taken out an equity release but didn't know the details. I was shocked when I read the paperwork. Their house was worth £90k when they took it out. They released £29k but signed over 90% of the house. It is worth £200k now so the Equity release people will get £180k back for their £29k loan. As the agreement also included a leasehold agreement that will cost £2k to sort out on top of the sale fees and marketing costs so there is likely to be little left for my brother in law and 3 siblings. When I raised the unfairness of the agreement with the equity release company they told me that my brother in laws parents would have had to have taken financial advice at the time. Well I think it was pretty bad advice and cant help thinking that the advisers were on commission. Is there any possible redress for what is clearly a total unfair contract.

Ayr_Rage

Why do you think it is an unfair contract?

There doesn't on the face of it to be any ambiguity and as long the rules were followed and the person(s) signing the contract were of sound mind then there isn't anything to be done.

Brie

I believe there was a change in the regulations about equity release a few years back which made it more "fair" in some ways. Previously there seemed to be all sorts of bad practice. I do understand why it's upsetting to lose 90% of the value when they only benefitted with about 30% of the value.

Nasqueron

https://forums.moneysavingexpert.com/discussion/6666065/rip-off-equity-release-is-there-anything-that-can-be-done

How do you know he didn't agree to the terms and was happy with them to get the money he wanted that he wouldn't need to repay until his death?

Are you really concerned about a sale which will be long since time barred or just that there isn't much inheritance?

This sort of deal might be a Shared Appreciation Mortgage, was it with Barclays / Bank of Scotland? There have been some legal cases taken but it's recommended you take specialist legal advice about this e.g. Clarke Willmott (just found on google, not a recommendation, do your own research) but even they warn it could be time barred

MEM62

Just, my opinion but equity release should only be a last resort for the desperate and, whilst it may not be as bad as it once was, it is still a poor solution for most people.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/81980393#Comment_81980393

Why? Why shouldn't people enjoy what they worked for and release the money?

Only aggrieved are those that aren't getting the windfall they thought.

Just my opinion.

mobileking1980

https://forums.moneysavingexpert.com/discussion/6666065/rip-off-equity-release-is-there-anything-that-can-be-done

We had exactly the same concerns last year. We lost both parents in 2024 and, while dealing with their affairs, uncovered a repulsive folder of documents about an equity release policy.

In short, in 2008 our parents took a £30,000 advance on the family home in exchange for signing away 90% ownership to the bandits at Retirement Plus (now Milton Homes). When we found the paperwork, we sought legal advice, spoke to the FCA, and met with multiple advisory agencies. The evidence was overwhelming: our parents had been mis-sold and badly mis-advised.

Among the documents was even a letter from a solicitor acting for Retirement Plus stating they could not advise our parents on the product they were signing. Yet Retirement Plus maintained the solicitor had effectively told them everything was fine, and the contract stood.

The house sold last year for £399,000. After Retirement Plus deducted their costs, the estate received just £2,000. A £30,000 advance ultimately returned only £32,000 to our family on a property worth nearly £400,000.

There is something profoundly wrong about that. Morally, it is indefensible — yet at the time, there was nothing to stop it.

We began a legal challenge over mis-selling, but the costs of taking on Retirement Plus became impossible, and we had to abandon it. That has been devastating. To say this has broken our family would not be overstating it. And the behaviour of Retirement Plus after our parents died was not just insensitive — it was utterly abhorrent.

MEM62

https://forums.moneysavingexpert.com/discussion/comment/81980402#Comment_81980402

Why? If you can't see that selling your house for 30% of what it is worth isn't reason enough then I am not going to be able to explain it to you.

flaneurs_lobster

It's all very well people declaring that equity release schemes are a "Rip off", "unfair" or "abhorrent" but I'm not seeing many suggestions as to other options for homeowners who are cash-poor to realize funds from their only asset before their death.

Nasqueron

https://forums.moneysavingexpert.com/discussion/comment/81980429#Comment_81980429

They are expensive but a lot of the complaint seems to be not that the parents had money which they used to enjoy life but rather that when they died they didn't get a big inheritance.

Non-advised sales operate on the basis people need to do their own research to make an informed decision

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81980558#Comment_81980558

There is a general unwillingness amongst some people to discuss their finances with their family. If people were more open, then the family may have decided to loan the parents money against a charge on the property, thus retaining the equity in the property for the family to eventually inherit.

I think some of these calculations are ignoring the fact that the parents had the money interest free for many years. If the property has more than doubled in value, we are probably talking about a loan that was made over 20 years ago. Borrowing £30k at 5% interest over 20 years would have raked up over £50k in interest. If you only had to repay that interest you would be down 50+30=80k on the current value and the lender took the risk on how long the money would be borrowed for, as well as house price inflation.