Two of Britain’s biggest banks – Barclays and Bank of Scotland – are being taken to court over mortgage products that left some customers facing debts worth many times what they originally borrowed.
The legal action, centres on shared appreciation mortgages (Sams), sold between 1996 and 1998. These products were marketed as a way for older homeowners to release cash from their property without monthly repayments.
In return, borrowers agreed to give the bank a large share of any increase in the value of their home. At the time, this might have seemed manageable. But with house prices soaring in the decades since, some customers are now trapped with eye-watering debts.
How the mortgages worked
With a shared appreciation mortgage:
- Borrowers could release up to 25% of their home’s value
- No monthly repayments were required.
- When the property was sold or passed on, the bank would claim the original loan plus up to 75% of the increase in value.
That meant someone borrowing £30,000 in the late 90s could end up owing hundreds of thousands today. In some cases more than 20 times the original sum.
What the banks say
Both Barclays and Bank of Scotland defend the mortgages, saying customers had independent legal advice before signing, and stressing that no repayments were required during the lifetime of the loan. Barclays also notes that borrowers kept their original equity and “a share” of any future gain.
However, critics say this misses the point. The scale of repayments has left many homeowners, and even their children after inheritance, with devastating financial consequences.
Could you be affected?
These cases highlight how complex financial products can leave consumers trapped in unfair situations. If you or a relative took out a shared appreciation mortgage in the late 1990s, you may be able to pursue legal action through a specialist solicitor.
We’ll continue to follow developments in the shared appreciation mortgage lawsuits to keep you informed.
