Lawsuits looming over 'entirely unfair' debt-trap mortgages

Two of Britain's biggest banks face being sued over "unfair" mortgages that have left some people owing up to 20 times the sum they originally borrowed.

- Rupert Jones

The law firm Teacher Stern is bringing group actions against Barclays and Bank of Scotland in an attempt, it says, to win justice for two new groups of claimants comprising current and former customers and their next of kin.

One of those affected, Ann Galbraith, borrowed £33,000 from Barclays in 1998, but her debt to the bank is now estimated at about £660,000 and could rise further.

The cases involve a controversial type of mortgage on sale between late 1996 and mid-1998 and available only from the two banks.

The shared appreciation mortgages (Sams) were ostensibly aimed at helping "asset-rich, cash-poor" older people release some of the value locked up in their homes.

They typically allowed people to borrow up to 25% of the property's value, and usually there were no repayments to make during the lifetime of the loan.