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    • Ribbons473
    • By Ribbons473 11th Mar 17, 8:23 AM
    • 44Posts
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    Ribbons473
    Equity Release Advice
    • #1
    • 11th Mar 17, 8:23 AM
    Equity Release Advice 11th Mar 17 at 8:23 AM
    Apologies in advance if this is in the wrong place.

    My parents have asked me to look into Equity Release for them and after a quick Google and not really liking what I found I thought here may be a good place to ask

    My dad is 76 & my mum is 70, my dad is retired and my mum still works 15 hours a week although she is now struggling to keep this up, they have a house currently worth around 750k with an 80k interest only mortgage on it, they obviously don't feel that their pensions are enough to support them if my mum stops working and would also like to do some work in their home to make it more suitable for them as they get older.

    So is equity release ever a good idea?

    Thanks in advance.
Page 1
    • ViolaLass
    • By ViolaLass 11th Mar 17, 8:31 AM
    • 4,900 Posts
    • 6,757 Thanks
    ViolaLass
    • #2
    • 11th Mar 17, 8:31 AM
    • #2
    • 11th Mar 17, 8:31 AM
    Could they downsize?
    • kingstreet
    • By kingstreet 11th Mar 17, 8:32 AM
    • 31,301 Posts
    • 16,715 Thanks
    kingstreet
    • #3
    • 11th Mar 17, 8:32 AM
    • #3
    • 11th Mar 17, 8:32 AM
    This is the best place to start;-

    http://www.equityreleasecouncil.com/home/

    and then consult an IFA or mortgage broker with extended lifetime mortgage permissions for advice.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 8:42 AM
    • 6,295 Posts
    • 6,657 Thanks
    AnotherJoe
    • #4
    • 11th Mar 17, 8:42 AM
    • #4
    • 11th Mar 17, 8:42 AM
    With an equity release, all they would be doing is the financial equivalent of simultaneously increasing the interest rate and stopping the payments on their current IO mortgage and letting them mount up. As you've probably read, this can mount up rapidly and to very high values.

    Why dont they consider downsizing? At some point, perhaps if one of them needs care, they may need to sell and then they'd need to pay for the changes to be done all over again. Plus the changes they make to their house may devalue it, so sort of a financial double whammy making it harder to move.

    No doubt they are fond of this house, but if you can get them to appreciate that at some point they will most probably have to move anyway, doing it now, whilst its under their control, might be a better plan and certainly far cheaper? They could buy something for say 500k and release a lot of money.
    • Ribbons473
    • By Ribbons473 11th Mar 17, 11:24 AM
    • 44 Posts
    • 5 Thanks
    Ribbons473
    • #5
    • 11th Mar 17, 11:24 AM
    • #5
    • 11th Mar 17, 11:24 AM
    Thanks so much for your replies.

    My brother and I live very close to each other so would really like them to sell up and move closer to us especially as they are ageing now and they currently live around a 45 - 60 minute drive from us, however they have lived in their house for 38 years and have tried to move a few times always pulling out at the last minute as my dad doesn't want to move....it's so hard, I don't want to pressurize them but they could buy a house or flat where we live for around 550k and then come out with a good 150k which to me makes far more sense....
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 5:01 PM
    • 6,295 Posts
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    AnotherJoe
    • #6
    • 11th Mar 17, 5:01 PM
    • #6
    • 11th Mar 17, 5:01 PM
    Annoying isnt it ? I know of a lot of elderly people like this, one recently caused massive problems to her children through this attitude*, you wonder if you will become like that in your dotage.

    I think you just need to work on them more. Are there any nice retirement apartments nearby you could show them? ISTR someone like Churchill or similar run a scheme whereby you can rent a flat for a week to try out the lifestyle.

    * she didnt want to "move away from her neighbourhood" despite the fact she never went out of the house (literally apart from hospitals and doctors) and never saw anyone as all her previously local friends had died or moved away.
    Last edited by AnotherJoe; 11-03-2017 at 5:04 PM.
    • ViolaLass
    • By ViolaLass 11th Mar 17, 5:16 PM
    • 4,900 Posts
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    ViolaLass
    • #7
    • 11th Mar 17, 5:16 PM
    • #7
    • 11th Mar 17, 5:16 PM
    I would talk them through what you didn't like about equity release.
    • Missmarch17
    • By Missmarch17 21st Mar 17, 6:33 PM
    • 18 Posts
    • 3 Thanks
    Missmarch17
    • #8
    • 21st Mar 17, 6:33 PM
    • #8
    • 21st Mar 17, 6:33 PM
    My dad took out equity release on his home 11months before he died. His property was worth much less than your parents and he released 15k, with interest there is just over 16k owing now. He left the house to me in his will and I want to pay the money back. However I would need a mortgage or secured loan on the house to raise the money....... This is where it gets complicated, aviva (the equity release company) are preventing the transfer of property by any means, I cannot lend on the property as the deeds are not in my name, but I can't pay aviva without lending, nor can I sell the house as again it is not in my name.
    Aviva are the only ones with any control over the property even though they 'own' about 10% of its value.
    In short, your parents will effectively be selling their entire property for a fraction of its value, you and any other family will be left with no rights over the property and I would try everything possible to help them avoid. Is there anyway that family could help financially?
    My dad never discussed his plans with me......if only he had!
    • dunstonh
    • By dunstonh 21st Mar 17, 7:07 PM
    • 87,665 Posts
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    dunstonh
    • #9
    • 21st Mar 17, 7:07 PM
    • #9
    • 21st Mar 17, 7:07 PM
    Please note that missmarch17 has posted on another thread. I would suggest keeping comments on that thread rather than polluting different threads.
    http://forums.moneysavingexpert.com/showthread.php?p=72287742#post72287742
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • margaretclare
    • By margaretclare 21st Mar 17, 7:14 PM
    • 10,223 Posts
    • 16,975 Thanks
    margaretclare
    It can work, but from what I hear and read, those of us for whom it has worked may be in a minority.

    It has worked for DH and me. We did it in 2003 just to pay off an existing mortgage, rather like the OH's parents. Not having a mortgage to pay has meant we can spend the money on other things - one year it was a new roof!

    What has helped us was that the lifetime mortgage, when it was set up, had the interest rate pegged to the BoE rate. This has remained historically low for several years, so the interest hasn't rolled up at the rate we were warned it might.

    We couldn't downsize - in 1990 my first husband and I had downsized already from a 3-storey Pennine cottage to this 2-bed bungalow in Essex.

    It's not something to be gone into lightly. There are many very serious factors to be taken into account.
    r ic wisdom funde, r wear ic eald.
    Before I found wisdom, I became old.
    • Missmarch17
    • By Missmarch17 21st Mar 17, 8:15 PM
    • 18 Posts
    • 3 Thanks
    Missmarch17
    Dunstonh

    I posted my experience because the op asked for advice, not to as you rudely put it 'pollute' the thread!

    Had I known my fathers intentions I would have offered to help pay his monthly bills as an alternative to him taking equity release, it would have saved an incredible amount of stress, something his/her parents may wish to avoid putting their children through.
    • dunstonh
    • By dunstonh 21st Mar 17, 10:18 PM
    • 87,665 Posts
    • 52,890 Thanks
    dunstonh
    I posted my experience because the op asked for advice, not to as you rudely put it 'pollute' the thread!
    Its not rude. You are posting across multiple threads which belong to others. Thread hijacking is another term for it as is polluting.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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