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Top court in Spain confirms 12 equity release mortgages were illegal

Top court confirms 12 equity release mortgages were illegal
  • The mortgages, mostly taken out by Britons in Malaga province between 2004 and 2007, totalled six million euros

Spain's Supreme Court has upheld earlier judgements that 12 mortgages sold by a British company were illegal. The mortgages, mostly taken out by Britons in Malaga province between 2004 and 2007, totalled six million euros. The equity release products were designed to reduce inheritance tax and supplement pension income.

The judges agreed with the previous rulings of a Bilbao court that SL Mortgage Funding nº1 Limited (SLMF), based in Chester (UK), didn't have the proper permissions to sell in Spain.

SLMF kept most of the income from the loan itself and reinvested it with Premier Group, in the Isle of Man, and the courts said that counted as an unapproved investment product.

According to Luis González of Costa-based Lawbird Legal Services, who represented the claimants, the ruling confirms that operating in breach of mandatory financial regulations is illegal speculation, even if the company was legally operating in its own country. He added that his "clients' nightmare had now ended".