Home News ‘I took money out of my house to buy a car – now I owe £170,000’

‘I took money out of my house to buy a car – now I owe £170,000’

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Liz Sherwood helped her 97-year-old aunt organize her finances when she discovered something to cool her blood.

This is a statement from Aviva, one of the UK’s largest IPO lenders, where her aunt borrowed money for the value of her assets in 2003, and since then debt has gone from £ 42,000 to £ 176,000. It states that it has surged. “It was just terrible,” said Sherwood, who asked him to use a pseudonym. “No one in the family was thinking about anything.”

According to the real estate website Zoopla, her aunt had a lifetime mortgage in her £ 130,000 home and is now worth about £ 350,000. Lifetime mortgages are the most popular form of IPO According to Wealth Management’s Quilter, more than 5,000 were brought out in March alone, an increase of 29% from 2021. Last year, about £ 5 billion was withdrawn from real estate using equity releases.

But interest rates are rising rapidly right now, and city observers say homeowners struggling to keep up with their living expenses may want to borrow these loans against their best interests. I warned you.

The Financial Conduct Authority said borrowers in financial difficulty are at increased risk of borrowing “inappropriate” lifetime mortgages. It urged lenders to be “alert” for signs of vulnerability in their customers.

Lifetime mortgages give homeowners access to money trapped in the value of their home while they continue to live in real estate. However, the borrower pays interest on the loan. This means that accruals will increase rapidly when compounded over the years.

Repayed only when the borrower dies or is taken care of, Andy Wilson of Andy Wilson Financial Services said:

Sherwood’s aunt borrowed a home renovation and a new car loan at a rate of 7.55 pc. In the 20 years since then, debt has quadrupled. She “worked her life and owned her own home, so she now has to rely on the state to pay for her care and care facilities,” Ms. Sherwood said. I did. She said, “She may not be enough to pay for the funeral.”

Equity release sector Since then, better safeguards have been built in, but complaints continue to be received from borrowers and their families who are aware of the true cost of a loan only if it is too late.

Ms. Sherwood complained about Aviva and the financial ombudsman service, both concluding that the loan results were “properly explained” to her aunt.

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