Equity Release Burden on ageing coupleMake Text Bigger
Dear 118 Community, first of all, a happy and prosperous new year to you all.
One of our friends parents are in the following situation. They are an elderly married couple . He is 83 and in poor health, but just about managing on his own at home (this could change for the worse any week/month now).
His wife is 85 and very frail, shortly to be moved into a nursing home permanently (from her current hospital bed). She is also not deemed fit to be able to sign any legal documents. (No Power of Attorney in place). Their house is in joint names. One legal charge is on the title deeds, which is from the equity loan company. (Taken over twice since the original loan was taken out)
This elderly gentleman told me they had found this equity release company having come across their advert, as they were getting their car insurance from them at the time. This gentleman then rang the company; some forms were posted to them which they signed and sent back; and the loan was deposited into their account.
The original loan was for £74000 taken out in March 2007. The latest statement available to Dec 2013 shows an amount due of £111500 to repay the loan. Interest at 6.04% fixed is applied compound, which means their next statement is going to show around £118000 owed. They also have to sign an annual declaration next month that they still occupy their home. Once the gentlemen moves into full- time care, the equity loan company will want their money.
This couple have middle aged children.
Is there anything this family can do to prevent this loan snowballing month in/out?
Is there a chance the loan was not set up in accordance with the financial services guidelines in force at the time – sadly, this gentlemen says he got rid of the original paperwork he had, when he was informed the original lender had been taken over.
Would it be practical for a family member to be ‘given’ the house, on condition of paying off the loan without upsetting the tax man or setting up tax liabilities or other problems in the future? This angle with a view to provide a rental income for the elderly couple less the cost of servicing the loan.
Your considered advice would be really welcomed.
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