Equity Release when offspring is the lender.

In my experience any legal charge registered against a property has to be paid before any distribution of the proceeds of sale. Therefore as long as the Sons' charges are registered at the Land Registry the loans would have to be paid first. The only exception to this would be if the Sons were persuaded to allow any charge in favour of the Local Authority to take preference over theirs. Any good Solicitor should be able to draw up a suitable legal charge to protect the Sons' money.

Why not just equity release?

From what I have read of equity release the "loan" company interest rate is much higher. Admittedly I haven't read up on it of late but I did some research when Equity Release was first introduced. If the man's sons have sufficient money to lend to him then I think that would be a much better solution.

Surely a loan with a charge on the property would be sufficient. I do not see why it has to be a mortgage.

Agreeing with FlicketyB on this one there should be no problem getting a charge on the property,if work needs doing on the property now the father may as well have the up to date facilities now rather than wait until the property is sold at a later date.

FlicketyB

I think you are correct and I think the father means charge rather than a mortgage.
With regard to what sunseeker has said I think the council will try to persuade the sons to let any claim the council has take priority so they will have to stand firm against the council.
The sons want to lend the money as they know the property is willed to them and they do not want high interest to be paid to an Equity Release Company.
I am going to suggest the son's charge interest on the loan.
Hopefully the father will never have to go in to care and the loan repayment will never have to be enforced.
Really the father would like to get an answer that a charge given to relatives is effective against the council rather than he see's no reason.
If anybody else has had to enforce a charge on a relatives house I would be pleased to hear from them.

Frank

I seem to recall that some charges are considered more important than others so I would check with the Solicitor whether a simple charge over the property would secure any loan rather than a mortgage

Hi sunseeker

I think you are thinking of preferential creditors who would rank over a floating charge but not a fixed charge.

www.bizhelp24.com/money/bankruptcy/preferential-creditors-and-other-creditors.html

Obviously the council may be able to put a charge on the property as the father enters care but not before then.

Another thing the sons could do is ask for it to be made an all monies charge.
This will mean that the sons would be able to lend more money without having to create a further charge.
Also if the council wanted to take a charge over the property they would have to notify the sons.
If the sons then lent further money the further money would rank after the councils charge but the original money would still rank as a first charge.

Frank

HunterF - correction: sees not see's - look up the use of the apostrophe. Just one of my annoyances, the misuse of the apostrophe.