Bank heavily pushing equity release on parents - help !

rendlesham

My parents mortgage has just become unfixed, it now sits at about £13,500, they have both retired so money a bit tight, their Bank Manager heavily trying to steer them into equity release :eek: but they aren't keen, due to bad press, any ideas on a better way to fund this ammount considering they are on a tight budget and retired ? thanks

ben500

rendlesham wrote: »

My parents mortgage has just become unfixed, it now sits at about £13,500, they have both retired so money a bit tight, their Bank Manager heavily trying to steer them into equity release :eek: but they aren't keen, due to bad press, any ideas on a better way to fund this ammount considering they are on a tight budget and retired ? thanks

Sorry can't help but just wanted to say, not surprised to see that the bank are trying to get the yolk back around your parents neck.

margaretclare

Your parents have only to say a polite but firm 'No thank you'.

OTOH we did equity release in 2003 to pay off an existing mortgage of £45K and we've never regretted it. The first place to look is not the bank, but the SHIP website: https://www.ship-ltd.org

The bank is keen to sell its own products, but these are rarely the best option.

FraudBuster

This is a guide from the FSA:

http://www.moneymadeclear.fsa.gov.uk/pdfs/equity_release_ink.pdf

Let_Us_See

Difficult to comment without further information. Which bank? Are your parents now on SVR?

Whilst it maybe a little `tight` are your parents able to meet their mortgage payments and is it on a repayment basis and not interest only? If they can meet the payments then it would probably be best to stay with bank (even although the bank would prefer redemption of the mortgage), as the `Equity Release` interest rate will be a lot higher.

If they are finding it really tight then there are a number of equity release alternatives (However, please investigate all avenues (including benefits and grants):

1. If they can meet mortgage payments, and just need a little more income, then a `monthly income` based equity release scheme may assist.
2. If they cannot meet mortgage payments, but have sufficient income for everyday living, then a lump sum equity release maybe the answer to redeem mortgage.
3. If they cannot meet mortgage payments and require additional income, then a combined lump sum and monthly income maybe the answer.

If you do decide Equity Release is the better option then go whole of market as your bank's scheme will probably not be market leading.

dunstonh

but they aren't keen, due to bad press, any ideas on a better way to fund this ammount considering they are on a tight budget and retired ? thanks

This is what happens when you let sales people at banks guide you. Most IFAs would put you off equity release where they can and consider it a last resort and try to look at other options first.

If your parents are getting to last resort stage then never get a bank to do it. Go through an IFA that specialises in equity release.

jamesd

If they can pay the mortgage, they can do that. If they can't then one approach is to have you or other family members gradually lend them the difference between what they can afford and need to pay. Once the mortgage is paid off they can then switch to repaying the family members. In effect this is increasing the mortgage term, but without remortgaging. It's a good deal better for them than remortgaging would be. I suggest an interest rate of 5% on the family borrowing.

If they have other debts than family borrowing to reduce interest rates may be an option to reduce the amount of interest paid and free up additional income.