Elderly Homeowners Trapped in Debt
Lloyds Bank is facing a £60 million lawsuit over alleged "rip-off" mortgages, with lawyers claiming that 160 elderly people are trapped in their homes owing huge amounts. A High Court judge is set to hear the class action lawsuit in January, which could result in a significant compensation payout for the affected homeowners.
Shared Appreciation Mortgages Under Scrutiny
The lawsuit revolves around shared appreciation mortgages that were sold by the Bank of Scotland, which is now part of the Lloyds Banking Group, between 1997 and 1998. These mortgages allowed customers to release up to 25% of their property's value through low interest or interest-free loans. However, the loans had to be repaid in full, along with a 75% share of the home's future increase in value.
Crippling Repayments as House Prices Soar
With house prices skyrocketing over the years, many homeowners now face crippling repayments. For example, one homeowner who released £30,000 in equity now has to pay back a staggering £251,250 after the value of their property shot up from £120,000 to £415,000.
"Grossly Excessive" Loan Terms
London law firm Teacher Stern, representing the affected homeowners, argues that the loan terms were "grossly excessive" and have effectively trapped borrowers. They claim that the Bank of Scotland failed to adequately advise customers about the risks and potential consequences of these mortgages.
Lloyds Bank's Response
The Bank of Scotland, now part of the Lloyds Banking Group, maintains that it recommended borrowers to seek financial advice to ensure they understood the product and that it was suitable for their needs. The bank also claims that all customers were advised by their own solicitor. However, they also stated that they will do everything reasonably possible to assist customers facing financial hardship.
