My parents have a ‘lifetime mortgage’ – what happens if my mother sells?
She will need to go into a care home soon and we’re worried the lender will set the price
Q When my father died, my parents’ joint mortgage was put into the sole name of my mother. This was when we discovered that he had not been paying the mortgage for many years and had in fact changed it to a what the lender called a “lifetime mortgage” which I understand is some kind of equity release mortgage.
My mother still pays no mortgage payments (she is 90 and not in a position to do so anyway). The interest rate is now 2.5% and works out at about £1,750 a year. This basically means she is renting her own property for that amount a year. Pretty soon she will need to leave her home and go to a care home. Can you tell us what the situation will be as far as selling the bungalow when it is time to move? Will the lender sell the property and reclaim the money owed and if so who sets the price? If we sell it, do we just tell the lender and then pay off the remaining mortgage? The amount that is owed is well below the value of the property.