Is This Loan Legit?

BigDogsWang | 12:46 Sun 23rd Dec 2012 | Personal Finance

9 Answers

My parents have been paying £70.00 a month for a £20k loan that they have to pay for the rest of their lives, which is secured on their house.They have been paying for the last 10 years and it will only be paid back in the event of their death.Is it likely the payments include PPI? The loan is from Abbey which has since become Santander.

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boxtops

This doesn't sound like an equity release plan - it can't surely be for the rest of their lives, otherwise if they live long, they will surely have paid for it already? Or does the instalment end when they are something daft like 120, but pays out on the balance if one or both of them die?

You would know if the payments included PPI, Santander is obliged to put it on the statements.

ubasses

This does sound strange, have you actually read the paperwork. If they have taken a lifetime equity release could they have taken some type of life policy with it?

boxtops

My dad had an equity release policy with Abbey many years ago, Abbey released £20K to him in the form of a monthly income payment, then it passed to my mum when he died. It sounds to me as if your parents have taken out a mortgage to release cash - but that would have an end date, surely it can't be for the rest of their lives. You need to ask Abbey for sight of the original agreement, if your folks don't still have it.

ubasses

Just had a look at the Santander site, they do not seem to do lifetime equity release. These are normally taken out with specialist companies. On a £20,000 interest only Mortgage £70 could quite easily be the monthly interest payment.

BigDogsWang

Question Author

Thanks for all your answers...I will have to look deeper into this..I have only learned about this recently...It seems the 70 a month is only interest hence they would be paying for the rest of their lives?