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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10853
Experience:  Barrister 17 years experience
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My sister and I own a property in twickenham. we primarily

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My sister and I own a property in twickenham. we primarily bought the property for somewhere for our elderly mother to live. There is no mortgage on the property. Our mother's health is deteriorating, one option we looked at is to take a small mortgage on the property (say £60k) to assist with care costs. The house is valued at around £600k, I have tried a couple of mortgage brokers but nobody wants to know. Is there a legal or other reason why this is so difficult? any assistance will be appreciated

Hello, and thank you for your question. I am your Expert and I will provide the answer you require.

1. Dear *****, there is no legal impediment to your mother or the owner of the house in getting a mortgage on it. The reason for there being few lenders willing to sanction an equity release mortgage is that lenders have an aversion to this type of arrangement unless they specifically provide for equity drawdown mortgages. This is because mortgage brokers like performing mortgages which provide for a monthly payment and which are 'performing' assets on their books. Unless, there is a specific product which provides for equity release, many mortgage providers will not offer you a loan which remains un-performing and which does not allow for a monthly payment. Be aware that legally, there is a different type of legal regime under the Consumer Credit Act applicable to an equity release mortgage. So, many lenders don't offer this type of mortgage.

2. There are two types of equity release mortgages, namely a lifetime mortgage and a home reversion plan. Here is a link to a webpage where the different providers are named https://www.money.co.uk/mortgages/equity-release-mortgages.htm

Customer: replied 1 month ago.
Thank you for your response, very helpful

3. Be aware additionally, that many mortgage brokers get a commission on monthly payments. So, equity release has a different system of remuneration of the mortgage broker. So hence, many don't offer it.

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Customer: replied 1 month ago.
Will do, thanks again