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Q My late father took out an equity release mortgage with Northern Rock three years ago for £50,000. Which pot has the government put this into, or has it been sold off? My mother still lives in the house and asked me: "Can I change this agreement to a cheaper rate now the bank is government owned?" MF
A It is very likely your parents' equity release mortgage belonged in the Lifetime portfolio of equity release deals that Northern Rock sold to JP Morgan in January last year. However, this won't have made any difference to your mother as Northern Rock still administers the mortgages it sold off.
The ownership of the mortgage also makes no difference to whether your mother can change to a cheaper rate. As with a normal mortgage you can switch a lifetime – or equity release mortgage – to take advantage of falling interest rates. However, to do this your mother will have to pay an early repayment charge. Repaying a Northern Rock equity release mortgage within the first five years of taking it out attracts a fee of 5% of the loan. So in your mother's case she would have to pay £2,500 to switch, which may well cancel out any benefit she would get from moving to a lower interest rate with a different equity release lender.
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