Would an equity release scheme be appropriate?

cepheus

I've just been speaking with a friend who shares a largish house with his brother. His salary is low and wishes to pay of some loans and increase his income somewhat. They are unlikely to have dependents and are both within 7 years of retirement.

I guess an option may be one of the equity release schemes, however a complication may be that he only wishes to 'sell' his half of the house and these schemes seem to have a poor reputation.

No doubt he needs to see a specialist IFA, but having a quick look these seem to be the options. Any ideas on which may be the most appropriate to focus on? Perhaps he should wait until these become more favourable?

Home reversion schemes

You sell your home or a share of it to a reversion company for a lump sum or in return for a monthly income (or a combination of both).

Interest-only mortgages

You borrow a lump sum secured against the value of your home. You pay interest each month, but you have a lump sum to spend as you wish. The capital is eventually repaid out of the sale proceeds.

Home income plans

These used to be the most popular type of equity release plans. You take out a mortgage against your home and use the money to buy an annuity which guarantees you an income for life. Mortgage payments are deducted from this monthly income, although the original capital is only repaid from the sale proceeds, normally after you die.

Lifetime mortgages

The lender gives you a lump sum or monthly income (or both). You pay nothing – the interest is ‘rolled up’ into the loan. The amount borrowed plus this interest is repaid out of the proceeds from the sale of the property after you die.

Shared appreciation mortgages

These are not currently available but have been popular in the past and may be available again in the future. You borrow a lump sum based on the value of your home; there are no repayments until you die or the property is sold. Then the amount you originally borrowed is paid back plus an agreed percentage of the amount by which the home has increased in value

http://www.unbiased.co.uk/financial-advice/finance-guides/mortgages/equity-release/

cepheus

Looks like I'm answering my own question again, but this article sounds relevant. I will pass this onto him.

http://www.thisismoney.co.uk/mortgages/article.html?in_article_id=483649&in_page_id=8&ct=5

Sounds like these may be the people to ask

http://www.keyrs.co.uk/

EdInvestor

Not sure he would be able to do equity release on his half only, the brother would probably need to be involved.

Try this site to start: https://www.ship-ltd.org