releasing equity / cost of care / retirement planning

aliflint77

hello all

my parents have retired and on the money they have at the moment from pensions they do not have as much desposable cash as they had hoped for. There house is morgage free

They would like to be able to release some equity to able me to be able to put a larger deposit on my next house. I was thinking of a morgage and i pick up the payments ?

They would also like to be able to get some cash from the house but do not want any extra monthly payments how is best to go about this without downsizing ?

lastly i am worried about the fact if they go into care and their current pensions will not cover the costs the local goverment will take the money from there estate so how do we going about preventing this ?

any advise greatly received !!!

ali

EdInvestor

Sounds like equity release is the way to go.Start here:

www.ship-ltd.org

Ian_W

aliflint77 wrote: »

my parents have retired and on the money they have at the moment from pensions they do not have as much desposable cash as they had hoped for. There house is morgage free

They would like to be able to release some equity to able me to be able to put a larger deposit on my next house. I was thinking of a morgage and i pick up the payments ?
If they don't have much income, how would they get a mortgage? The mortgage would have to be in their names unless they transferred the house to you which is fraught with dangers for them. Also you would have to declare the source of funds to your lender and it will make Equity Release much more difficult, if not impossible.
They would also like to be able to get some cash from the house but do not want any extra monthly payments how is best to go about this without downsizing ?
EdInvestor has supplied a link to SHIP but they need to be careful with equity release, it has a very tarnished reputation although it is now regulated and the products appear much better. You haven't said how old they are but generally more money will be forthcoming the older they are as the lender, statistically at least, won't have as long to wait
for their money back.
lastly i am worried about the fact if they go into care and their current pensions will not cover the costs the local goverment will take the money from there estate so how do we going about preventing this ?
Read THIS POST from m_13 (on another thread) which outlines the Law Societies Guidance to solicitors about clients giving away assets to avoid care home fees. It really has to be done carefully and before there is any suggestion they're likely to need residential care.

On the final point, given they haven't a lot of disposable income, what assets, beside the house (which Eq release will effectively reduce in value), would they be looking to dispose of? Would these assets not best be used for their day to day living first, with ER on the house as a last or later resort?