We'll lose our home for this

An elderly couple face losing their home this week unless they can clear arrears on a 25-year interest-only mortgage that is due to run until one of them is in their early nineties. Shirley and Gerald Quy, 68 and 59 respectively, say they did not understand the terms of the loan. But their case also highlights the increasing difficulties elderly people are having with debt.

The couple make children's clothes for London markets. Seven years ago they bought a former counci house in Rochester, Kent, for £16,000 but their debts mounted when trade was poor. Last year, with a £60,000 mortgage, a second loan of £17,000 and mounting credit card debts, the Quys approached a broker, Capital Remortgages, which arranged a £93,000 loan with Kensington Mortgages. But the couple have not been able to keep up payments and say that they did not fully understand what they were taking on; the loan has a 25-year term and was set up on an interest-only basis, leaving the Quys responsible for repaying the capital on maturity, due when Mrs Quy is 92. 'I'll literally be climbing out of my grave to pay it off,' she says.

Of more pressing concern is the repossession proceedings started by Kensington Mortgages to recover arrears. The initial interest rate was 7.4 per cent, reduced by a 1.75 per cent discount for the first 12 months. Repayments started at at £444 a month, but have risen to £711 after recent interest-rate rises.

The couple now owe nearly £4,000 and face eviction if they do not pay off their arrears by 11 November. They sought help from a Citizens' Advice Bureau but were told that although Shirley Quy is past pensionable age, she cannot claim state benefits as her husband is still earning. The only state aid available was alternative accommodation, said the CAB. Not wanting to move after paying a mortgage for seven years, the Quys went to the Family Care Trust (FCT), a Kent charity that helps those in dire straits.

Mohan Chudha, FCT's senior partner, says, 'Mortgage companies should not even consider giving loans of this length to elderly couples. It shows a real lack of care and responsibility. Brokers and lenders should arrange loans based on age, income and affordability.'

Chudha said that the lender should also have waited longer to get an eviction order. He registered the Quys' case with the Mortgage Code Compliance Board, the Financial Services Authority, which took over mortgage regulation from the MCCB on 1 November, and the Financial Ombudsman.

London-based Kensington Mortgages, a member of the Council of Mortgage Lenders, says, 'We find it is better to act quickly when evicting borrowers who go into arrears as it means their property can be sold at a higher price, giving them more money to pay off their creditors. We contacted the Quys and talked to them about their problems before going to court. If we had waited 15 months, they would have had far greater arrears, the house might have sold for less and they would have had to meet even bigger debts. As a sub-prime lender that helps higher-risk people, we often give mortgages and remortgages to people aged 50 or more provided they are still able to work.'

A spokesman for Capital Remortgages said: 'We give out the best advice we can. The Quys had one or two credit problems, so this was the best lender we could find for them.'