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    • Jay53
    • By Jay53 28th Nov 17, 5:10 PM
    • 7Posts
    • 1Thanks
    Jay53
    Equity release
    • #1
    • 28th Nov 17, 5:10 PM
    Equity release 28th Nov 17 at 5:10 PM
    Hi, I'm considering equity release so I can give both my sons the deposit needed to get a mortgage. They each pay a ridiculous amount of rent per month so are unable to save for the deposit. Their mortgage repayments would be considerably less than their current rent, freeing up income for a better standard of living for them & their children (my grandchildren). I live in a small flat which is mortgage-free; I considered selling my flat and moving into rented accommodation but I don't earn enough to meet the financial criteria set by letting agents. Equity release has had bad press in the past, but appears to be the only way to help them. Any advice please ?
Page 1
    • PeacefulWaters
    • By PeacefulWaters 28th Nov 17, 5:20 PM
    • 7,295 Posts
    • 9,037 Thanks
    PeacefulWaters
    • #2
    • 28th Nov 17, 5:20 PM
    • #2
    • 28th Nov 17, 5:20 PM
    Equity release can mean a mortgage you make payments on yourself or a mortgage where interest rolls up until you sell up or die.

    How much is the property worth?

    How much do you wish to borrow?

    What sort of repayment schedule do you have in mind?
    • Jay53
    • By Jay53 28th Nov 17, 5:38 PM
    • 7 Posts
    • 1 Thanks
    Jay53
    • #3
    • 28th Nov 17, 5:38 PM
    • #3
    • 28th Nov 17, 5:38 PM
    My flat is worth about £160,000 , I would be looking to borrow approx £60,000 (£30,000 per son); I would opt for a payment-free mortgage as I am approaching retirement.
    • jonesMUFCforever
    • By jonesMUFCforever 28th Nov 17, 6:52 PM
    • 24,253 Posts
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    jonesMUFCforever
    • #4
    • 28th Nov 17, 6:52 PM
    • #4
    • 28th Nov 17, 6:52 PM
    This might sound harsh but IMO let them get on with their lives.
    £60k today will roll over into probably all of the equity should you live to say 85.
    Your inheritance all gone?
    What goes around - comes around
    give lots and you will always receive lots
    • Sarastro
    • By Sarastro 28th Nov 17, 7:51 PM
    • 339 Posts
    • 266 Thanks
    Sarastro
    • #5
    • 28th Nov 17, 7:51 PM
    • #5
    • 28th Nov 17, 7:51 PM
    To be honest, what's the point of waiting? I mean, you are effectively giving them their inheritance early - it's your money. My partner and I have always said that we want to help our family within our lifetime, i.e. now so we help those who are struggling as best we can.

    There's a lot of me saying, get on with it. Enjoy the benefits of doing it now.

    And, there's a bit of a reality check as well. You need to be sure that you are not leaving yourself in a vulnerable position in anyway, e.g. if you need greater care and support later on. You also need to be sure you're not being taken advantage of. I know they are your children, but eyes very wide open please.

    Equity release can be quite harsh in terms of the deal, I think, which is why it's maybe had such a bad press. Are you sure there aren't other ways you could help? I'd say find yourself a good independent financial adviser and talk it through with them. Could you release some equity to buy a percentage of a house which they live in? They would have to pay rent for your share of the house, but there are probably ways to make this nominal. That way, you would still have an asset to your name and wouldn't be worse off.
    • badmemory
    • By badmemory 29th Nov 17, 12:25 AM
    • 1,051 Posts
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    badmemory
    • #6
    • 29th Nov 17, 12:25 AM
    • #6
    • 29th Nov 17, 12:25 AM
    Would equity release at your age even free up £60k? You seem to be very young to take advantage of this.
    • forgotmyname
    • By forgotmyname 29th Nov 17, 12:55 AM
    • 26,214 Posts
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    forgotmyname
    • #7
    • 29th Nov 17, 12:55 AM
    • #7
    • 29th Nov 17, 12:55 AM
    So your going to rent a property to give your sons a deposit on a mortgage?

    So instead of them paying rent you will be paying rent instead?

    Give them the money you would be using to pay your rent to help them purchase a property?
    Punctuation, Spelling and Grammar will be used sparingly. Due to rising costs of inflation.

    My contribution to MSE. Other contributions will only be used if they cost me nothing.

    Due to me being a tight git.
    • Tarambor
    • By Tarambor 29th Nov 17, 11:21 AM
    • 1,740 Posts
    • 1,195 Thanks
    Tarambor
    • #8
    • 29th Nov 17, 11:21 AM
    • #8
    • 29th Nov 17, 11:21 AM
    Hi, I'm considering equity release so I can give both my sons the deposit needed to get a mortgage. They each pay a ridiculous amount of rent per month so are unable to save for the deposit.
    Originally posted by Jay53
    Be truthful with yourself. Do they go out for meals and nights out, do they go have holidays, do they have fairly new cars on PCP deals etc? Those are the real reasons they can't afford a deposit, not the rent.

    I live in a small flat which is mortgage-free; I considered selling my flat and moving into rented accommodation but I don't earn enough to meet the financial criteria set by letting agents.
    That is absolute utter madness. You currently have a no doubt not very flashy but easily afforded living at the moment and you want to end up living hand to mouth just to help out kids who no doubt would be able to afford to save for a deposit if they'd made some sacrifices like you did when you got your first place such as knocking the holidays and going out on the head and banging in overtime for a few years?

    My son recently made a hint of wanting me to help him out with a deposit this month when he found out we'd sold a house we used to rent out. I've seen how much money he and his partner waste on frivolous stuff so he got told that that door was well and truly shut and if they cut down on the spending they'd have a deposit in 6 months.
    Last edited by Tarambor; 29-11-2017 at 11:28 AM.
    • Herzlos
    • By Herzlos 29th Nov 17, 12:17 PM
    • 6,066 Posts
    • 5,509 Thanks
    Herzlos
    • #9
    • 29th Nov 17, 12:17 PM
    • #9
    • 29th Nov 17, 12:17 PM
    Can you downsize or re-mortgage?

    You should be able to get a pretty decent deal on a £60k mortgage with £100k equity (37.5% LTV). Probably means you'd be paying less than you would in rent.
    • iolanthe07
    • By iolanthe07 29th Nov 17, 3:14 PM
    • 4,923 Posts
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    iolanthe07
    Please take professional advice if you're going to do this. My parents-in-law were royally screwed over by a glib salesman and bitterly regretted taking equity release.
    I used to think that good grammar is important, but now I know that good wine is importanter.
    • Jay53
    • By Jay53 29th Nov 17, 4:10 PM
    • 7 Posts
    • 1 Thanks
    Jay53
    It's not my inheritance, it's theirs, they'd be getting it now whilst I'm still around to see the benefits for them plus I'd still have a roof over my head.
    • Jay53
    • By Jay53 29th Nov 17, 4:13 PM
    • 7 Posts
    • 1 Thanks
    Jay53
    No, as I said in my original post, I don't earn enough to be accepted by letting agents as a potential tenant so equity release could mean they get their inheritance now & I still have somewhere to live.
    • Herzlos
    • By Herzlos 29th Nov 17, 4:22 PM
    • 6,066 Posts
    • 5,509 Thanks
    Herzlos
    No, as I said in my original post, I don't earn enough to be accepted by letting agents as a potential tenant so equity release could mean they get their inheritance now & I still have somewhere to live.
    Originally posted by Jay53
    I mean can you sell that flat for £160k, buy another for ~£95k, and give them the £60k you'd have left after fees? It'd probably still give you a nicer setup than renting.

    How low is your income if you're not passing rental checks?

    The real risk with equity release is that whilst you'll maybe get £60k out of it now, it'll cost you the full value of the property - you'll essentially be giving away £100k to a finance company.
    • Jay53
    • By Jay53 29th Nov 17, 4:23 PM
    • 7 Posts
    • 1 Thanks
    Jay53
    My flat only has one bedroom, if I downsized to a studio it wouldn't release enough equity & I don't fancy living in a bedsit at my age. My age would also be an issue for re-mortgaging.
    • Herzlos
    • By Herzlos 29th Nov 17, 5:33 PM
    • 6,066 Posts
    • 5,509 Thanks
    Herzlos
    Can you gift each child 25% of the flat, and have them use that £40k equity as leverage for their own mortgages? You might need legal and broker advice though.
    • Jay53
    • By Jay53 30th Nov 17, 9:50 AM
    • 7 Posts
    • 1 Thanks
    Jay53
    Good advice Herzlos, gifting them a percentage of the flat would mean I can stay put; my next step is to get financial & legal advice, thanks to all who replied
    • TrickyDicky101
    • By TrickyDicky101 30th Nov 17, 10:11 AM
    • 2,824 Posts
    • 1,828 Thanks
    TrickyDicky101
    Can you gift each child 25% of the flat, and have them use that £40k equity as leverage for their own mortgages? You might need legal and broker advice though.
    Originally posted by Herzlos
    That wouldn't help - the kids wouldn't have any money and the OP wouldn't then own 100% of his flat either. How do you expect the kids to 'leverage the £40k equity' for their own mortgages?
    • ViolaLass
    • By ViolaLass 30th Nov 17, 10:27 AM
    • 5,143 Posts
    • 7,141 Thanks
    ViolaLass
    Could you go and live with one of your children? Then you could combine financial forces.

    Otherwise I don't see how this is a goer.
    • Keep pedalling
    • By Keep pedalling 30th Nov 17, 10:54 AM
    • 4,070 Posts
    • 4,432 Thanks
    Keep pedalling
    Can you gift each child 25% of the flat, and have them use that £40k equity as leverage for their own mortgages? You might need legal and broker advice though.
    Originally posted by Herzlos
    That is bonkers, if either of them ran into financial difficulty or die before the OP he could end up losing his home. I would not normally recommend ER, but it is a better option than this idea.

    If the OP is old enough to obtain ER then there is little risk to him. His children will certainly lose much of their inheritance but in the long term may still be better off having been out of the rental market for a good few years.
    • Silvertabby
    • By Silvertabby 30th Nov 17, 11:04 AM
    • 1,924 Posts
    • 2,429 Thanks
    Silvertabby
    That is bonkers, if either of them ran into financial difficulty or die..
    .. or get divorced.
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