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    • tombsd
    • By tombsd 7th Jan 18, 9:02 AM
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    tombsd
    Early repayment of equity release
    • #1
    • 7th Jan 18, 9:02 AM
    Early repayment of equity release 7th Jan 18 at 9:02 AM
    Firstly an apology in advance if this has already been covered but I did search and couldn't find an answer.
    My father has recently died, leaving the house to my mother. They took out a small equity release loan a few years ago which is now worth about £100k.
    Does anyone know if this can be repaid to the company without selling the property or if there's any other way out of the huge repayment? I'm not sure how we'd be able to afford to repay it but if we can that would be preferable to losing the full value of the property if my mother doesn't want to sell the house. It's currently accruing about £500 per month.
    Thank you
    Donna
Page 1
    • AnotherJoe
    • By AnotherJoe 7th Jan 18, 9:36 AM
    • 7,919 Posts
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    AnotherJoe
    • #2
    • 7th Jan 18, 9:36 AM
    • #2
    • 7th Jan 18, 9:36 AM
    I think itís very unlikely that the equity release insists the house is sold, they will just want their money back. Whether thatís from selling the house or from selling the Van Gogh in your attic, they wonít care.

    I take it much or all of the money they got has gone ? Or in any case she needs it ?

    If you do decide to pay it off yourself ensure this is done as a loan to your mother. Otherwise, if for example you just give her £100k+ and she pays it back and then at some later date goes into care, itís possible all that money will be used to fund her care by the council. If itís a loan and the council sell the house then youíll get that money back.

    Would it be practical for your mother to downsize into a smaller cheaper property releasing enough equity to pay off some or all of the loan?
    • fatbelly
    • By fatbelly 7th Jan 18, 9:48 AM
    • 11,803 Posts
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    fatbelly
    • #3
    • 7th Jan 18, 9:48 AM
    • #3
    • 7th Jan 18, 9:48 AM
    Was the equity release not set up in joint names? It is normally a requirement that where the borrower clearly has a spouse or partner, the plan is written in joint names from the outset to make sure that both individuals have the right to remain in the property until they die or move out.
    • TrickyDicky101
    • By TrickyDicky101 7th Jan 18, 10:35 AM
    • 2,892 Posts
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    TrickyDicky101
    • #4
    • 7th Jan 18, 10:35 AM
    • #4
    • 7th Jan 18, 10:35 AM
    You need to see the contractual details which your parents agreed to when taking out the equity release - these should specify what early repayment options (and possible penalties) are available.
    • Mnd
    • By Mnd 7th Jan 18, 2:17 PM
    • 338 Posts
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    Mnd
    • #5
    • 7th Jan 18, 2:17 PM
    • #5
    • 7th Jan 18, 2:17 PM
    Was the equity release not set up in joint names? It is normally a requirement that where the borrower clearly has a spouse or partner, the plan is written in joint names from the outset to make sure that both individuals have the right to remain in the property until they die or move out.
    Originally posted by fatbelly
    I don't think that's the issue, it would appear the poster would like to pay off the equity release money now, so save the roll up interest for however long her mother lives in the house
    • Thrugelmir
    • By Thrugelmir 7th Jan 18, 6:24 PM
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    Thrugelmir
    • #6
    • 7th Jan 18, 6:24 PM
    • #6
    • 7th Jan 18, 6:24 PM
    I don't think that's the issue, it would appear the poster would like to pay off the equity release money now, so save the roll up interest for however long her mother lives in the house
    Originally posted by Mnd
    Seems as if there's been a realisation that there won't be much left in the form of inheritance.
    ďOpportunities come infrequently. When it rains gold, put out the bucket, not the thimbleĒ
    ― Warren Buffett
    • Mnd
    • By Mnd 7th Jan 18, 7:46 PM
    • 338 Posts
    • 362 Thanks
    Mnd
    • #7
    • 7th Jan 18, 7:46 PM
    • #7
    • 7th Jan 18, 7:46 PM
    To be honest, if the poster is trying to reduce the loan in whatever way they choose, that is up to them.
    I am not adverse to the idea of using equity release in the future, but if my son wanted to prevent this then I would be open to hus suggestions
    • tombsd
    • By tombsd 7th Jan 18, 8:53 PM
    • 2 Posts
    • 0 Thanks
    tombsd
    • #8
    • 7th Jan 18, 8:53 PM
    • #8
    • 7th Jan 18, 8:53 PM
    Thank you for your help.
    It's not so much about inheritance, but I know my dead father wold rather his children reap the benefit of the house than the equity company. In the meantime it's about not losing too much money while my mother decides whether or not to downsize, leaving her house of 25 years for a much smaller place.
    • AnotherJoe
    • By AnotherJoe 8th Jan 18, 9:01 PM
    • 7,919 Posts
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    AnotherJoe
    • #9
    • 8th Jan 18, 9:01 PM
    • #9
    • 8th Jan 18, 9:01 PM
    Thank you for your help.
    It's not so much about inheritance, but I know my dead father wold rather his children reap the benefit of the house than the equity company. In the meantime it's about not losing too much money while my mother decides whether or not to downsize, leaving her house of 25 years for a much smaller place.
    Originally posted by tombsd
    It obviously is about inheritance but I see nothing wrong with that.

    I think the issue might be, were you to, for example, provide a loan to her to pay off the equity loan and accrued interest then your mother has no real incentive to move out as she doesn’t see the amount owed clicking up exponentially. The upside might be a much lower interest rate and IF you could get an interest only loan you’d pay I’d guess around £150/month and the sum would remain stable.
    Last edited by AnotherJoe; 09-01-2018 at 12:51 AM.
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