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    • Teabay
    • By Teabay 13th May 18, 9:25 PM
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    Teabay
    87yr old father will be 99 when interest only mortgage expires - was he mis-sold?
    • #1
    • 13th May 18, 9:25 PM
    87yr old father will be 99 when interest only mortgage expires - was he mis-sold? 13th May 18 at 9:25 PM
    Hi,
    My father is 87. In 2011 when he was 77 he and my mother (died 3 years ago) needed some money.
    They remortgaged the family home and took out 59k ish from the already paid off mortgage, with Alliance & Leicester. Their mortgage was already fully paid off. My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!
    My dad will be 99 years old when the interest only deal comes to an end, and 60,000 will be due in 2029.
    Was he mis-sold? Clearly, they were both retired when they took this out, and have absolutely no savings or means of paying it off, bar selling up when he is 99.
    What should I do to help him? How can we minimise costs? Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need 60k debt in my late 60s when hopefully I will be retired!
    The house might sell for around 180k. It is unchanged since around 1973!!
    Thank you for reading so far, I appreciate all of your advice.
    Rebecca.
Page 1
    • dunstonh
    • By dunstonh 13th May 18, 9:34 PM
    • 94,525 Posts
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    dunstonh
    • #2
    • 13th May 18, 9:34 PM
    • #2
    • 13th May 18, 9:34 PM
    They remortgaged the family home and took out 59k ish from the already paid off mortgage, with Alliance & Leicester.
    What did he do with the 59k?

    My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!
    A&L didn't do equity release. It wasnt a product they sold.

    Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need 60k debt in my late 60s when hopefully I will be retired!
    Switch it to equity release.

    was he mis-sold?
    Or did he mis-buy?

    As it happens, an interest only mortgage is about 2-3 times cheaper than equity release. So, he has had 7 years of lower cost than an equity release mortgage. So, its been a lucky outcome whichever way you look at it.

    the choice now is to keep paying and hope he dies before age 99 (excuse the crude way of putting that but it is effectively what that option entails) or switching to equity release.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • davidmcn
    • By davidmcn 13th May 18, 9:43 PM
    • 8,528 Posts
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    davidmcn
    • #3
    • 13th May 18, 9:43 PM
    • #3
    • 13th May 18, 9:43 PM
    It seems pretty likely that, for one reason or another, the house is going to have been sold before he turns 99. And if it isn't, he's got plenty of time to plan ahead and e.g. downsize to something affordable using his equity.

    Or the lender may well persevere rather than demand the capital back immediately ("bank evicts 99 year old" is never good publicity...).

    Not sure why it would be misselling - do you think they ought to have sold him an alternative (and inevitably more expensive) product instead? Or just not given him the money, even though he "needed" it?
    • GDB2222
    • By GDB2222 13th May 18, 9:45 PM
    • 14,706 Posts
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    GDB2222
    • #4
    • 13th May 18, 9:45 PM
    • #4
    • 13th May 18, 9:45 PM
    Hi,
    My father is 87. In 2011 when he was 77 he and my mother (died 3 years ago) needed some money.
    They remortgaged the family home and took out 59k ish from the already paid off mortgage, with Alliance & Leicester. Their mortgage was already fully paid off. My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!
    My dad will be 99 years old when the interest only deal comes to an end, and 60,000 will be due in 2029.
    Was he mis-sold? Clearly, they were both retired when they took this out, and have absolutely no savings or means of paying it off, bar selling up when he is 99.
    What should I do to help him? How can we minimise costs? Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need 60k debt in my late 60s when hopefully I will be retired!
    The house might sell for around 180k. It is unchanged since around 1973!!
    Thank you for reading so far, I appreciate all of your advice.
    Rebecca.
    Originally posted by Teabay
    Is he paying the mortgage interest out of his pension, or is it being added to the mortgage?

    Realistically, even if he survives to age 99, the chances are very strongly that he won't be able to live on his own in the family house at that age. So, probably well before then, he'll sell up and come and live with you, or sell up and use the sale proceeds to pay care home fees.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • Teabay
    • By Teabay 13th May 18, 9:56 PM
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    Teabay
    • #5
    • 13th May 18, 9:56 PM
    • #5
    • 13th May 18, 9:56 PM
    Thank you. I feel that he may have 'mis-bought' rather than have been mis-sold. I guess I am surprised that the A&L would even consider remortgaging a retired couple with no income and no plan for repayment - was this usual then?
    If he dies aged 100, is the debt gone? Or will I (next of kin) be liable for it?
    Currently he pays 150ish pm from his savings / pension.

    Thank you for your advice so far.

    59k - they bailed my brother out with it, he made bad choices, nothing left, he sadly died so all is gone (let's not go there..)
    • davidmcn
    • By davidmcn 13th May 18, 10:03 PM
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    davidmcn
    • #6
    • 13th May 18, 10:03 PM
    • #6
    • 13th May 18, 10:03 PM
    If he dies aged 100, is the debt gone? Or will I (next of kin) be liable for it?
    Originally posted by Teabay
    The estate is liable for it. You (or whoever the executors are) sell the house, repay the mortgage from the proceeds in the usual way, and the beneficiaries get what's left.
    • antrobus
    • By antrobus 13th May 18, 10:04 PM
    • 16,035 Posts
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    antrobus
    • #7
    • 13th May 18, 10:04 PM
    • #7
    • 13th May 18, 10:04 PM
    ....He still has all his marbles, but is (clearly) not very money savvy....
    Originally posted by Teabay
    Even 77 years olds are quite capable of being rational. But why do you think he is "not very money savvy"? What do you think he's done wrong? Does he think he was mis-sold? Or are you just a bit miffed he has spent some of your inheritance?

    The average life expectancy for an 85 year old is 92. There is a 1 in 10 chance of reaching 98, and a 1 in 20 chance of reaching 100.
    https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/articles/whatareyourchancesoflivingto100/2016-01-14

    And probably a much bigger chance of your father needing a care home, at which point the house would be sold to fund the fees.
    • Teabay
    • By Teabay 13th May 18, 10:20 PM
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    Teabay
    • #8
    • 13th May 18, 10:20 PM
    • #8
    • 13th May 18, 10:20 PM
    I guessed I'd be selling the house and paying it off with the proceeds, yes.
    Money savvy - I think I'm annoyed that they didn't tell my brother to get a grip and build his own debts, and that they took on an interest only mortgage when they could have afforded a repayment loan!
    It's likely that my dad will make 99, maybe independently. At 87 he's still driving, giving talks, going to the city for concerts etc at least twice a week - in fact, he's out more than me!
    Is there a benefit or a drawback to me going on a repayment mortgage with him right away? Any tax / inheritance drawbacks?
    Thank you for your advice and patience!
    • LABMAN
    • By LABMAN 13th May 18, 10:22 PM
    • 888 Posts
    • 1,524 Thanks
    LABMAN
    • #9
    • 13th May 18, 10:22 PM
    • #9
    • 13th May 18, 10:22 PM
    10 years younger seven years ago?
    • Teabay
    • By Teabay 13th May 18, 10:27 PM
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    Teabay
    !!!55357;!!!56833;
    Took it out early 2011.
    88 next month.
    He'll be 99 when it finishes.

    Sorry if my numbers are out
    • Teabay
    • By Teabay 13th May 18, 10:28 PM
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    • 0 Thanks
    Teabay
    Not sure why the weird numbers appear at the beginning, I didn't put them there...
    • ViolaLass
    • By ViolaLass 13th May 18, 10:30 PM
    • 5,435 Posts
    • 7,488 Thanks
    ViolaLass
    If they can afford a repayment loan then there's your solution.
    • A Nice Englishman
    • By A Nice Englishman 13th May 18, 11:15 PM
    • 2,117 Posts
    • 1,184 Thanks
    A Nice Englishman
    I wonder if they said to their son "regard this money as your inheritance. We will be leaving everything else to your siblings"?
    • GDB2222
    • By GDB2222 14th May 18, 9:59 AM
    • 14,706 Posts
    • 79,776 Thanks
    GDB2222
    I guessed I'd be selling the house and paying it off with the proceeds, yes.
    Money savvy - I think I'm annoyed that they didn't tell my brother to get a grip and build his own debts, and that they took on an interest only mortgage when they could have afforded a repayment loan!
    It's likely that my dad will make 99, maybe independently. At 87 he's still driving, giving talks, going to the city for concerts etc at least twice a week - in fact, he's out more than me!
    Is there a benefit or a drawback to me going on a repayment mortgage with him right away? Any tax / inheritance drawbacks?
    Thank you for your advice and patience!
    Originally posted by Teabay
    No tax/inheritance tax issues, assuming his entire estate is within the 325k IHT nil rate band when he dies.

    There is no benefit in your 'going on' his mortgage, whatever that actually means. I think you mean that you want to take on responsibility for his debt and start paying it off. But, I thought that the whole point of this thread was that you were worried about finding yourself responsible for the debt when he dies (which you won't be)? So, why take on this burden voluntarily?

    What you could do is give him a few thousand pounds a year for him to use to repay the mortgage. I reckon about 4000 a year should do it. But, you should consider instead saving that money yourself in an ISA, and hopefully you'll have the best part of the 59,000 saved by the time he reaches age 99, or maybe more, depending how your investment does.

    If you do give him the 4k a year, the downsides are:
    • It increases his assets, and it may all go in care home fees.
    • He may change his will and leave everything to the cats and dogs home.
    • He may give more of his money away to what you regard as undeserving causes. He has form on this!
    Last edited by GDB2222; 14-05-2018 at 10:02 AM.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • silvercar
    • By silvercar 14th May 18, 10:58 AM
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    silvercar
    Arguably, better to be given a mortgage that lasts till your 99 than one that ends when you are 80. When he is 99 he can sell up and use the remaining equity to buy a smaller place outright, rent a retirement home or live with you. He's saved a lot by lower interest charges than equity release.
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