Barclays is under intense scrutiny after it emerged that an 89-year-old widow may lose her home because of a loan that was taken out by her late husband in the 1990s. Beryl Hutchinson is now facing a demand from Barclays for £165,000 ($213,000) to repay a £16,250 loan that was taken out jointly with her former mining engineer husband, Barry. Although the loan was interest-free at the time it was taken out, it was secured against any future increase in the value of the couple’s bungalow, which means that the bank can take 75% of the house’s appreciation if it is sold.
Mrs Hutchinson and her son Steve, who only discovered the terms of the loan when his father’s health was already deteriorating, are struggling to find any way to challenge the bank. While they had wanted to sell the house to help pay for care, if Mrs Hutchinson needed it in the future, they have discovered that the bank can take far more than the original loan, meaning that their plans have been thwarted.
Barclays has refused to comment on the situation, and insists that all customers seeking shared appreciation mortgages were fully informed of the terms before they signed up for the deal. The spokeswoman for the bank said: “Before a shared appreciation mortgage was completed and the funds were released, customers were required to seek independent legal advice and confirmation was obtained from the customers’ solicitors that the terms of the legal charge and mortgage conditions had been fully explained to them. This was done to ensure customers fully understood the nature of their borrowing. The product literature also encouraged anyone interested in a shared appreciation mortgage to discuss their intended borrowing with their family.”
Although Barclays and Bank of Scotland were the only two banks to offer shared appreciation mortgages, around 15,000 of the deals were agreed between 1996 and 1998, according to the Financial Times. Barclays had to settle out of court with 60 of its customers last year
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