Choose an equity release plan for my mother?

Dennis_Major · 27 November 2004 at 2:11PM

My mother is considering taking one of these plans out but there are so many options i.e get a lump sum upfront and they have the house or a staged inheritance plan etc. I dont know the best way to advise her.
Is this too new an idea for people to give me feedback on?
Any comments would be appreciated.

vansboy · 27 November 2004 at 6:20PM

Think this needs moving to Loans & Debts, please mods!!

Tread VERRRRRY carefully, here - & take some proper advice - advice that you PAY for, rather than relying on the promises of whoever is offering the deals.

see what everyone else thinks, too, of course!!

VB

Bossyboots · 27 November 2004 at 8:17PM

Think this needs moving to Loans & Debts, please mods!!

Tread VERRRRRY carefully, here - & take some proper advice - advice that you PAY for, rather than relying on the promises of whoever is offering the deals.

see what everyone else thinks, too, of course!!

VB

This advice is 1000000000% spot on. These schemes can lead to heartache and are not always the best way to go.

I know a family whose father got into one of these schemes. He died within the first year and the company took the house leaving his family with nothing. He had allowed himself to be persuaded by the sales person who had veered him away from the crucial clause with platitudes.

Take some proper advice from a financial adviser before she agrees to anything.

Robert_Sterling_3 · 27 November 2004 at 8:24PM

Deal with SHIP

Read about SHIP here

Dennis_Major · 29 November 2004 at 2:45PM

Thanks for your comments, was not sure what section to put this in. My mother already has the SHIP info so will follow it along with them. Would still appreciate any comments on experience with these plans.

Rafter · 29 November 2004 at 8:34PM

Is there any way that you could do a DIY version?

We recently mortgaged my mother in laws house using our earnings as collateral and put the house in joint names.

The money that was 'released' was used to do some essential repairs to the house and to increase her income modestly, but significantly enough to make a big difference.

The scheme also has the impact of reducing the amount of investments that will be assessed for care home or other nursing care in the future.

Equity release in principal makes a lot of sense, but it is expensive to set up and the company doing so is taking a risk around house values and the length of time your mother might live. As a result the price and effective rate charged is very high when compared to other options.

Good luck.

R.

Dennis_Major · 30 November 2004 at 6:04PM

Hello Rafter

Very interested in your suggestion about doing it yourself.

I appreciate this is your personal business but would like to know more from you how you did it as I have 2 brothers who are not in a financial position to help me do what you did but would want a share.

Another option I wondered about was my mother taking an interest only mortgage out for a long term which we would pay back the capital on her death from selling the house?

Thanks again for your comments

Lift expert

Bossyboots · 30 November 2004 at 9:58PM

If you want to go the do it yourself route (which would be preferable if you can afford it), you can do it on the basis that you buy a share in the property. This would then give your mum some capital to call on. You would register the property in joint names and you would need a deed drawn up specifying the breakdown of equity. Your share would then be protected and your brothers will have no legal interest in that part of the property as it no longer forms part of your mum's estate. You have to be careful here with Capital Gains Tax so you should really take some proper advice and get any documents drawn up expertly. Buying a share in the property will have the effect of reducing your mum's estate in respect of inheritance tax. You will save yourself money and heartache in the long run if you take proper advice to minimise tax liabilities and safeguard your position.

Plumpud_3 · 1 December 2004 at 4:42AM

My parents took out an equity release loan aprox. 2 years ago. Unfortunately, my Dad died suddenly less than 6 months after taking the money out.

It seemed like a good idea at the time as neither myself or my sister need their money. They have worked all their lives and were asset rich, cash poor.

After my Dad died, my Mum didn't have the option of moving, to be nearer us or her Sister, as the amount they claim from the sale of the house as a penalty is huge in comparison with what was taken out. So much so, she would not be able to afford another property.

With hindsight, I would have gone for an interest only mortgage, to be paid off when the property was eventually sold. She could have moved then without penalty.

I didn't know it could be done at the time. I found out about it after it was recommended on Radio 4's 'Moneybox' programme sometime after.

Choose an equity release plan for my mother?

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