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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 2
    • MEM62
    • By MEM62 30th Nov 17, 11:46 AM
    • 1,394 Posts
    • 1,009 Thanks
    MEM62
    OP I salute your good intention and understand your motivation. However, from the brief details of your circumstances as you have explained them, any form of equity release is absolute madness.

    In truth, you are just not in a position to assist your sons.
    • Keep pedalling
    • By Keep pedalling 30th Nov 17, 12:57 PM
    • 4,099 Posts
    • 4,460 Thanks
    Keep pedalling
    OP I salute your good intention and understand your motivation. However, from the brief details of your circumstances as you have explained them, any form of equity release is absolute madness.

    In truth, you are just not in a position to assist your sons.
    Originally posted by MEM62
    Would you like to expand on why it is madness?
    • phillw
    • By phillw 30th Nov 17, 1:43 PM
    • 1,041 Posts
    • 622 Thanks
    phillw
    Would you like to expand on why it is madness?
    Originally posted by Keep pedalling
    They rarely represent best value for money.

    I'd have thought there would be a way of getting the OP's property secured on the childrens mortgages.
    • Keep pedalling
    • By Keep pedalling 30th Nov 17, 2:18 PM
    • 4,099 Posts
    • 4,460 Thanks
    Keep pedalling
    They rarely represent best value for money.

    I'd have thought there would be a way of getting the OP's property secured on the childrens mortgages.
    Originally posted by phillw
    Rarely best value option, but when all your assets are wrapped up in your home ER is the only option if you need to raise cash.
    • phillw
    • By phillw 30th Nov 17, 2:26 PM
    • 1,041 Posts
    • 622 Thanks
    phillw
    Rarely best value option, but when all your assets are wrapped up in your home ER is the only option if you need to raise cash.
    Originally posted by Keep pedalling
    They don't necessarily need cash. Mortgages don't require deposits from first time buyers because they need cash, or as an attempt to prevent people from getting a mortgage. It's to make sure there is enough equity in case they default.

    It should be possible to secure a mortgage on more than one property. I would certainly pursue that before equity release.
    Last edited by phillw; 30-11-2017 at 2:29 PM.
    • Keep pedalling
    • By Keep pedalling 30th Nov 17, 3:04 PM
    • 4,099 Posts
    • 4,460 Thanks
    Keep pedalling
    They don't necessarily need cash. Mortgages don't require deposits from first time buyers because they need cash, or as an attempt to prevent people from getting a mortgage. It's to make sure there is enough equity in case they default.

    It should be possible to secure a mortgage on more than one property. I would certainly pursue that before equity release.
    Originally posted by phillw
    Even if possible, securing a mortgage on the OPs house puts him at risk of losing his home, going down the ER route does not do this. I am not saying he should do that as there are other things to consider, like how will he be able to finance major future repairs if all his ER has gone to his children
    • MEM62
    • By MEM62 1st Dec 17, 9:28 AM
    • 1,394 Posts
    • 1,009 Thanks
    MEM62
    Would you like to expand on why it is madness?
    Originally posted by Keep pedalling
    OP is approaching retirement and is in a position where is accommodation is bought and paid for - therefore offering no small measure of security in his retirement. Equity release at his age would release very little capital in relation to the full value of the property and, depending on the arrangement, he will face a whole raft of restrictions if his circumstances change. For example he might not be able to move of have the property altered to suit his needs should he need to do so in later life.

    The OP is effectively giving up what is probably his largest life-asset for a fraction of it's value. He also gives up all flexibility in his own living arrangements. Equity release is a product for the desperate, not a product to assist his sons, who presumably are still working and able to pay their way in life.

    The question you should ask is 'what part of this arrangement would NOT be madness?'
    Last edited by MEM62; 01-12-2017 at 4:27 PM.
    • Jay53
    • By Jay53 2nd Dec 17, 4:22 PM
    • 7 Posts
    • 1 Thanks
    Jay53
    Apologies for late reply.
    Letting agents tell me I would need to earn at least £26,000 p.a. to rent a one bedroom flat for £750+ per month.
    My main gripe about the whole situation is that both sons are struggling to pay someone else's mortgage for them - as would I, if I rented.
    All the replies & advice I've had on here have been much appreciated & have certainly given me food for thought !
    • inland_andalucia
    • By inland_andalucia 4th Dec 17, 4:21 AM
    • 4 Posts
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    inland_andalucia
    Equity release doesn’t come cheap. A lifetime mortgage can cost more than three times what you borrow after 20 years, while some home reversion schemes demand more than 70% of your home’s value for just a 20% advance.
    • Nebulous2
    • By Nebulous2 4th Dec 17, 6:39 AM
    • 1,652 Posts
    • 1,002 Thanks
    Nebulous2
    I've always regarded the name 'equity release' to be entirely unsuitable. It implies the equity is trapped in your house and you are somehow freeing it. It's debt folks, wrapped up in a fancy package.

    People have often spent 300 months paying for their house, resenting the cost every month. They celebrate when it's done and then a few years later dive right in again.
    • Malthusian
    • By Malthusian 4th Dec 17, 3:11 PM
    • 3,460 Posts
    • 5,298 Thanks
    Malthusian
    People have often spent 300 months paying for their house, resenting the cost every month. They celebrate when it's done and then a few years later dive right in again.
    Originally posted by Nebulous2
    Indeed. The OP complains about the sons paying someone else's mortgage but by doing this they would have spent one half of their life paying their mortgage lender's mortgage so that they could spend the other half paying the equity release lender's mortgage, and between the two they would have spent far more on other people's mortgages than if they'd rented all their life.

    If the sons pay a ridiculous amount of rent each month and want to save for a house deposit then they either need to move to a less ridiculously expensive flat or drop the idea. I am not judging them, just setting out their choice.

    If the sons can't save for a deposit now, how are they going to save up for the cost of repairs and maintenance when they're homeowners?
    • NineDeuce
    • By NineDeuce 4th Dec 17, 3:30 PM
    • 540 Posts
    • 480 Thanks
    NineDeuce
    £60k is a lot. What kind of properties are they expecting?
    • Missus Hyde
    • By Missus Hyde 4th Dec 17, 4:04 PM
    • 316 Posts
    • 438 Thanks
    Missus Hyde
    I've always regarded the name 'equity release' to be entirely unsuitable. It implies the equity is trapped in your house and you are somehow freeing it. It's debt folks, wrapped up in a fancy package.
    Originally posted by Nebulous2
    The words “don’t” “touch” and “barge pole” come to mind.
    It's a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to, than I have ever known........Sydney Carton.
    • lildoonbuggy
    • By lildoonbuggy 4th Dec 17, 5:07 PM
    • 25 Posts
    • 101 Thanks
    lildoonbuggy
    How old are you? Are you still working? If under 65 you may be able to look into a guarantors mortgage for your sons, providing they have the income to meet the full cost of the repayments.
    • MEM62
    • By MEM62 5th Dec 17, 9:41 AM
    • 1,394 Posts
    • 1,009 Thanks
    MEM62
    £60k is a lot. What kind of properties are they expecting?
    Originally posted by NineDeuce

    Depends on where you are. That would be a deposit for diddly-squat in my neck of the woods.
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