Ayesha questioned whether her aunt and uncle, Anisa and Mazen, should have been sold a lifetime mortgage to raise funds.
What happened
Mazen, a self-employed business owner, was preparing to retire and needed to settle his business debts. His wife, Anisa, hadn’t worked for several years. So, they decided to sort out their finances.
A friend recommended an equity release scheme, encouraging Mazen and Anisa to contact the provider. After speaking to an adviser, Mazen agreed to take out a lifetime mortgage for £180,000 against their home – about a third of the house’s value.
Over the next few years, Mazen and Anisa experienced health problems. Anisa developed dementia, and Mazen’s physical health declined so much he needed home care. Their niece, Ayesha, had power of attorney over their affairs. When she reviewed the couple’s finances, she became concerned about the lifetime mortgage.
Ayesha felt that Mazen and Anisa didn’t really need the money, and hadn’t understood what they were signing up to, including the tax implications. When Mazen and Anisa needed to downsize because of their health, Ayesha found out they would have to pay an early repayment charge.
She complained to the mortgage company about the advice given, but disappointed with their response, she asked us to take a look.
What we said
Ayesha told us that Mazen didn’t really remember his meeting with the adviser. But he felt the company hadn’t fully explained the lifetime mortgage. To assess what had happened, we reviewed the records of Mazen’s meeting with the adviser.
The notes showed they discussed Mazen’s financial needs, including settling his business debts, refitting their kitchen and having funds for holidays.
Ayesha believed Mazen and Anisa could have used their savings instead of the mortgage. But we didn’t find any evidence of this in the records. Instead, the adviser was working with the information Mazen provided, which indicated they had limited savings.
The records also showed that Mazen’s business accountant attended the meeting and asked about possible tax implications. After the meeting, Mazen and Anisa were sent a letter with details of the advice and were told they had two months to make their decision.
We thought this gave Mazen and Anisa enough time to consider their options, with advice from their accountant.
We then considered the early repayment charge. We reviewed the terms of the mortgage and could see the early repayment charge was clearly mentioned. There was no evidence that Mazen and Anisa had health problems at that time or that they might need to sell their property in the future.
We explained to Ayesha that if the charge was applied, and she didn’t agree, this would need to be raised separately with the mortgage company. We could then look into this complaint if she wanted us to.
While we understood the challenges Mazen and Anisa were facing, we found no evidence they had received unsuitable advice when taking out the mortgage. We explained this to Ayesha but did not uphold her complaint.