Newspaper article The Evening Standard (London, England)

There Goes Our Home; Homes & Property Lawyer Fiona McNulty Answers Your Questions

Newspaper article The Evening Standard (London, England)

There Goes Our Home; Homes & Property Lawyer Fiona McNulty Answers Your Questions

Article excerpt

Q: My mother and father are in their late seventies and have decided toraise a lifetime mortgage of [pounds sterling]100,000 on their home, which is worthapproximately [pounds sterling]350,000. I have a friend whose parents did something similar andthere was no money left when they died. I am worried that this will happen tomy parents and also that they may be forced out of their home.

A: Lifetime mortgages (also known as equity release mortgages) differ fromstandard mortgages primarily because mortgage interest is not paid each monthbut added to the loan. As the loan grows, so do the monthly instalments and theamount owing increases at an ever faster rate. I calculate that with interestat six per cent a year there will be [pounds sterling]179,000 owing after 10 years and [pounds sterling]240,000after 15 years. Of course, it is not possible to say what property prices willdo in that period.

It is important that any scheme to which your parents subscribe complies withSafe Home Income Plans (SHIP) which includes protection for borrowers,particularly a guarantee that, provided the mortgage conditions are not broken,the home owners may stay in the property as long as they wisheven if the amount of the loan exceeds the value of the property.

These schemes are complicated. You must ensure that your parents receive advicefrom an independent financial advisor who has an equity release qualificationand also from a solicitor who has experience in this area of conveyancing.

Q: I am selling my leasehold mews house and my buyers have asked if I will helpthem get the freehold. My solicitor does not seem happy about this but I amkeen to help the buyers in this difficult market. What does it involve?

A: There is no reason why you should not help your buyers acquire the freeholdas long as your contract is correctly drafted and there is an appropriate Deedof Assignment. …

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