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  • FIRST POST
    • Heatherrose
    • By Heatherrose 10th Apr 18, 9:36 PM
    • 2Posts
    • 0Thanks
    Heatherrose
    Hev
    • #1
    • 10th Apr 18, 9:36 PM
    Hev 10th Apr 18 at 9:36 PM
    Hi my mum has an equity release agreement but now wants to sell her house and pay off the redemption fee after 15 years - she is 75 The equity company say she now owes 350000 (original loan was 80000) but to end the agreement early want her to
    Pay an additional 150, 000! Is this normal ? And is it legal ? Thanks
Page 1
    • Dox
    • By Dox 10th Apr 18, 9:50 PM
    • 936 Posts
    • 719 Thanks
    Dox
    • #2
    • 10th Apr 18, 9:50 PM
    • #2
    • 10th Apr 18, 9:50 PM
    They want her to pay 500,000...? When did she take out the agreement and on what terms/from whom? Was she independently advised by someone who was appropriately qualified?
    • LinBWales
    • By LinBWales 10th Apr 18, 9:51 PM
    • 29 Posts
    • 13 Thanks
    LinBWales
    • #3
    • 10th Apr 18, 9:51 PM
    • #3
    • 10th Apr 18, 9:51 PM
    You might be better posting this on the Mortgages forum as this is the Pensions forum. My mother had an equity release mortgage and if we had tried to redeem it early there was certainly a penalty, not sure it was anything like as much. If she had asked me before she had taken it on I would have advised her against it as I think they are a really bad idea, having looked into it. For starters, the interest is horrendous when compared with an ordinary mortgage!
    • kidmugsy
    • By kidmugsy 10th Apr 18, 11:46 PM
    • 11,588 Posts
    • 8,108 Thanks
    kidmugsy
    • #4
    • 10th Apr 18, 11:46 PM
    • #4
    • 10th Apr 18, 11:46 PM
    Pay an additional 150, 000! Is this normal ? And is it legal ?
    Originally posted by Heatherrose
    What does the original contract say?
    Free the dunston one next time too.
    • tacpot12
    • By tacpot12 10th Apr 18, 11:46 PM
    • 1,375 Posts
    • 1,184 Thanks
    tacpot12
    • #5
    • 10th Apr 18, 11:46 PM
    • #5
    • 10th Apr 18, 11:46 PM
    For the amount owing, the interest rate on the loan will have had to have been just over 10%. This is probably a reasonable rate of interest given that the lender was pretty much guaranteed to have to wait 25 years to get their money back (based on average life expectancies), and upto 40 years in some cases.

    Had the lender waited for 25 years, they would have received 800,000 from the sale of your mother's house, so only wanting 500,000 after 15 years might be quite reasonable. I understand that it is normal for their to be a penalty for early termination of an equity release loan; this will have been set out in the loan agreement.
    • AnotherJoe
    • By AnotherJoe 11th Apr 18, 11:57 AM
    • 10,589 Posts
    • 12,119 Thanks
    AnotherJoe
    • #6
    • 11th Apr 18, 11:57 AM
    • #6
    • 11th Apr 18, 11:57 AM
    How much is her house worth?
    • TadleyBaggie
    • By TadleyBaggie 11th Apr 18, 6:19 PM
    • 2,904 Posts
    • 2,214 Thanks
    TadleyBaggie
    • #7
    • 11th Apr 18, 6:19 PM
    • #7
    • 11th Apr 18, 6:19 PM
    OP has created another thread for this in the Mortgages forum (although the numbers aren't quite the same):

    http://forums.moneysavingexpert.com/showthread.php?t=5825579
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