Shared Appreciation Mortgage

Posted on 27 February 2011 by Kelly Bagwell


My partner's father has recently died and we have just discovered that he took out a shared appreciation mortgage about 15 years ago on his house but my partner's mother didn't sign any of the forms.

Can the bank force the sale of the house and if so, can she sell it at a reduced amount to a relative to reduce her liability? Obviously she would still live in the house until she died.

Kelly,

The bank can not force a sale unless the terms of the mortgage are broken and they repossess the property. However, if your partner's father was the sole owner and the only named borrower, then the mortgage debt will have to be repaid as part of settling his estate. I believe the amount due to the bank will be based on the open market value rather than any discounted sale price.

Shared Appreciation mortgages grew in notoriety when it became apparent that as houses prices increased the Lender's share of any sale proceeds meant that borrowers were left with so little that they could not afford to move home. This resulted in a group court action led by a firm of solicitors in Reading: RWP Solicitors. It is my understanding that the time limit to join this action has now passed but it may still be worth talking to them.

I also suggest that you contact the Lender to see if they have any specific schemes to help your partner's mother and talk to your own solicitors or Citizens Advice to see if they are able to help formulate a complaint against the bank on the basis of an unfair contract.

Peter

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

You are currently offline. Some pages or assets may fail to load.