We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Equity Release
Options

seven-day-weekend
Posts: 36,755 Forumite


I've heard some horror stories about equity release schemes.
However, I'm wondering if it could help us in the future.
We have a house in the UK, mortgage -free (worth around £160k-170k). We also have a house in Spain, mortgage-free.
However we don't have a lot of income. At the moment we have around £9.5k a year (one of the reasons we live in Spain!) , in 2.5 years I will also receive my State Pension. After that there is no more until 2014, when my husband gets his State Pension and I get my (small) Local Authority Pension.
We were wondering whether in the next few years, equity release from our UK house would help us fund the lifestyle to which we'd like to become accustomed (travelling in UK and Europe).
How do these schemes work? Would we have to pay any money back? Would our son be able to have the rest of the equity when we snuff it? Could he continue to live in the house once we've snuffed it?
I don't really know how they work - all information greatfully received!
We are almost 57 and 58.
However, I'm wondering if it could help us in the future.
We have a house in the UK, mortgage -free (worth around £160k-170k). We also have a house in Spain, mortgage-free.
However we don't have a lot of income. At the moment we have around £9.5k a year (one of the reasons we live in Spain!) , in 2.5 years I will also receive my State Pension. After that there is no more until 2014, when my husband gets his State Pension and I get my (small) Local Authority Pension.
We were wondering whether in the next few years, equity release from our UK house would help us fund the lifestyle to which we'd like to become accustomed (travelling in UK and Europe).
How do these schemes work? Would we have to pay any money back? Would our son be able to have the rest of the equity when we snuff it? Could he continue to live in the house once we've snuffed it?
I don't really know how they work - all information greatfully received!
We are almost 57 and 58.
(AKA HRH_MUngo)
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
0
Comments
-
Age concern have a factsheet you can send off for
Raising income or capital from your home - Factsheet 12
https://www.ageconcern.org.uk0 -
*zippy* wrote:Age concern have a factsheet you can send off for
Raising income or capital from your home - Factsheet 12
https://www.ageconcern.org.uk
Just read it....scary reading!
I don't think we'll be doing the equity release then.....(AKA HRH_MUngo)
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton0 -
Hi
Have a search on Martin's site - this has been discussed a lot in various threads over the time I've been coming here.
Basically, it depends what you want, and why. It's a big decision and you have to be clear about it all. That said...
We did it 3 years ago. Reason: we'd still have been paying £260 a month for a mortgage until we were 83. We don't really need extra income, but we could find pleasanter ways of using the £260 a month. One of us had to reach age 68 and then we were allowed to release 25% of the equity which we used to pay off the existing mortgage. What we have now is called a 'lifetime mortgage' and no, you don't pay it off, or rather, it gets paid off when the second of us departs this mortal coil and the place is sold.
The interest rolls-up and is set against whatever the value of the place is at the end. This 2-bed bungalow in south Essex was valued at £140K 3 years ago, now it's £165K thanks to the new roof this year and all the redecoration.
It's not suitable if you want to leave your home as an inheritance to the next generation. OTOH it reduces the value if you're worried about IHT, care home charges etc (we're not). There are schemes now where you don't have to take all the released equity at once, that's if you want it as income - you take it as and when you need it, so the interest doesn't accrue on the whole balance.
On the whole we're happy with it, especially DH. All that concerned us was that we have a guaranteed home here for as long as we want/need it. I'm very glad about that, having been left with a mortgage back in 1992 with redundancy coinciding with widowhood! Homelessness was a very real possibility for me in the early 1990s. We're not bothered about leaving anything behind us, we're guaranteed 'no negative equity' and we can stay here as long as we want to. So it works for us, but it may not work for everyone.
Have a look at the SHIP website first: https://www.ship-ltd.org
Best wishes
Margaret[FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
Before I found wisdom, I became old.0 -
Thankyou Margaret Clare.
Having read the above link and your post, I think it will not be suitable for us. It is important for us to leave the house (or at least a large part of its equity) to our son and I don't think we'd really cope with having a debt again after being debt-free. I know I for one would be continually checking the interest roll-up and obsessing about it (the obsessiveness has come with the menopause).
We may sell our Spanish house instead as we also have a llittle derelict wreck next door to it, so we could use some of the money to do the wreck up and then still have a small holiday home here plus a mortgage-free home in the UK, and would still have money left ove to travel.
Still wondering about the best way to go, but I don't think equity release is it.
Thanks again to those who replied.(AKA HRH_MUngo)
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton0 -
seven-day-weekend - your idea about selling your Spanish place to do up a derelict place you already own is a really good idea, as you have the best of both worlds then.
The other option, is to downsize your UK home and use the equity from that sale to fund your lifestyle.0 -
babiebeany wrote:seven-day-weekend - your idea about selling your Spanish place to do up a derelict place you already own is a really good idea, as you have the best of both worlds then.
The other option, is to downsize your UK home and use the equity from that sale to fund your lifestyle.
I don't really think downsizing the UK home is an option as all we would be able to get is a two-bed apartment, which if we have to share with our son is too small, we'd be getting under each other's feet and he'd be too much in our faces.
If of course he gets a place of his own, then it may be a possibility.
I think we will sell our Spanish place and do up the wreck. We've given ourselves until next spring to finish the renovations to this house and make the decision, then if we decide to sell it will be a good time to put it on the market.
Thanks to all.(AKA HRH_MUngo)
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton0 -
seven-day-weekend wrote:I don't really think downsizing the UK home is an option as all we would be able to get is a two-bed apartment, which if we have to share with our son is too small, we'd be getting under each other's feet and he'd be too much in our faces.
One of the options that we examined, before going down the 'lifetime mortgage' route, was downsizing. But there's not much you can downsize to from a 2-bedroom bungalow. There are 'retirement apartments' of course, we have 2 complexes going up in this little market town, but they are far from cheap. The only thing we'd have been able to downsize to was an ex-mining village in the Midlands, cheaper than Essex prices, but not a good option for a number of reasons.
We would just about have paid off the mortgage here when we're 83, 12 years from now, in time to die and leave it to somebody else! What's the point of that? There may be some equity left, depending on how long we live and how interest rates go, and anything left is planned to be split between 5 grandchildren, 3 of mine and 2 of his. I have a separate 'pot' that I intend to leave to my eldest granddaughter who needs help more than any of the others. Because of doing the equity release we are able to save - for more home improvements e.g. the boiler, and a few nice holidays: our Christmas getaway is a 5-day cruise on the Rhine, and then next July we're invited to a get-together of friends at Niagara Falls.
Margaret[FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
Before I found wisdom, I became old.0 -
Moneybox 7th Oct Item on Equity release If you don't want to listen to the whole programme the item is in the last few minutes so you can skip the first 20mins. Moneybox
Free EXPERT ADVICE IF YOU PHONE ON
MONDAY, 9 OCTOBER 2006 Money Box Live: Equity releaseMy weight loss following Doktor Dahlqvist' Dietary Program
Start 23rd Jan 2008 14st 9lbs Current 10st 12lbs0 -
Seven day weekend is too young to use equity release usefully at present. But in 10 or 15 years time it may well be worth revisiting - and by then there should be much more competition in the market, interest rates will hopefully be lower and the rollup problem less of a difficulty - also the house will likely be worth somewhat more, so less of the equity would need to be accessed. Son may also be more sorted and downsizing also a possibility.
Looks to me like doing up the wreck and keeping it, while flogging the other Spanish property is the way to go for the moment, as I think you said you would only be coming back for a few months a year after returning to the UK, and thus wouldn't need a lot of space?Trying to keep it simple...0 -
seven-day-weekend wrote:...
If of course he gets a place of his own, then it may be a possibility.
...
Have you considered selling your UK home (or "part" of it) to your son? Presumably you spend a good part of the year in Spain and, by the sound of it, want to spend even more time "away" from your UK house.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 244.1K Work, Benefits & Business
- 599K Mortgages, Homes & Bills
- 177K Life & Family
- 257.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards