SALLY SORTS IT: Aviva’s £50,000 equity release fee if parents sell their home

My 78-year-old mother recently had a stroke and now requires long-term care, which my elderly father cannot provide well enough.

She used to take care of him in their two story house, but now she can’t walk unaided so they have to move to a bungalow closer to me so I can help.

But maybe they can’t. About 25 years ago, when I was struggling, my parents took out a lifelong mortgage with Aviva.

They borrowed £60,000 and now owe £250,000. The interest is about 10 percent, but the worst part is that they have to pay a £50,000 prepayment if they sell. This is soul-destroying.

Aviva says the fee won’t be waived unless one of them dies or both need long-term care.

But the definition of needing care is incredibly specific – they only qualify if they can’t go to the bathroom unaided.

With newer contracts, the fine can be waived if only one person goes into long-term care.

This ridiculous charge blocks their ability to move. Please help.

AG, Henley-on-Thames.

Sally Hamilton replies: People 55 or older who, like your parents, are poor in cash but rich in bricks and mortar often opt for a lifetime mortgage — otherwise known as an equity release loan.

This allows homeowners to withdraw cash from the value of their property without paying back the loan (or any interest) until they die, receive long-term care, or when they move out without taking the loan with them.

Your parents could have transferred their loan to a new home (‘mortgage transfer’) if the lender approved the new home.

But they wanted to transfer instead, which doesn’t surprise me given the 10 percent interest on their deal. I was shocked at how the original loan had exploded.

Share release loans are now more mainstream and the average interest rate is 8.29 pc, according to analysts Defaqto. However, the crux of your complaint was the £50,000 prepayment, rather than the rate.

The rules for exit fines have been improved. Aviva’s newer plans don’t impose an early repayment fee as long as people have owned the mortgage for at least three years. And the fees are also waived if one of the borrowers needs long-term care after the three-year period.

Unfortunately, this is not the case with your parents’ 25-year plan. Both must require long-term care to avoid the fine.

I asked Aviva if it would waive the fee, because if your parents had to pay the £50,000, their money would be £20,000 short of what they needed for the one-storey house they’d been passionate about. When I first contacted Aviva, it was said that a final decision had not yet been made as a medical assessment was required for both parents.

Later, when the forms were completed, Aviva said that your mother was eligible for long-term care, but that your father did not meet all the criteria. But he did admit that he needed help with his mobility.

Fortunately, Aviva looked into this latter aspect and waived the fee.

A spokesperson said: ‘In exceptional cases, we look at other evidence in addition to the medical assessment to get a global picture of customers’ circumstances.

“After reviewing all of the evidence, we have decided that the early repayment charges do not apply.”

You were delighted. The next step is to arrange a more modern – and hopefully cheaper – lifetime mortgage on their new property. You are optimistic that the move should be possible now that they have the extra £50,000 to spend.

Bad luck claim fell between a rock and a hard place

During a camping holiday in France, I was driving with my family on a mountain road near Grenoble after a thunderstorm.

We rounded a corner – at a fairly slow speed due to heavy rain – and went over a rock in the middle of the lane. It hit the right front wheel hard, putting the car out of action.

I thought RAC failure would save us, but I was wrong: please help as I’m afraid I won’t be able to get us home.

RL, Bristol.

Sally Hamilton replies: In your panic you tweeted me for help. You explained that you bought £150 RAC European Breakdown Insurance (Comprehensive Plus) with your RAC car insurance policy to ensure all risks are covered.

But when you hit that rock, you found to your dismay that your claim fell between a rock and a hard place, if you’ll excuse the pun. In your eyes the car was broken. But as for the bad luck side of RAC, you had an accident.

This meant that your RAC motor insurance policy came into action instead of the breakdown policy. But this revealed a hole in your cover.

Although the insurer agreed to tow your damaged car and repatriate it to Britain, and to pay for a rental car, the latter only covered you for your trip in France.

This made you worry about getting your family and camping equipment on the ferry from Calais to Dover and back home to Bristol.

If your car had broken down, this would be covered by the breakdown policy. But not so under your motor insurance.

I contacted RAC and suspected as it could see you were a loyal customer, and although your chosen coverage level excluded passenger repatriation, it changed its mind. It helped get you and your family home as a “goodwill gesture.” This included a £570 taxi ride from Dover to Bristol.

Your experience is a lesson to all vacationers to check that all eventualities are covered before heading abroad on a road trip.

• Write to Sally Hamilton at Sally Sorts It, Money Mail, Northcliffe House, 2 Derry Street, London W8 5TT or email sally@dailymail.co.uk — provide phone number, address and a note addressed to the offending organization giving them permission to talk to Sally Hamilton. Please do not send original documents as we cannot take any responsibility for them. The Daily Mail cannot accept any legal responsibility for answers given.