Equity Release

sarahpilates

My mum has a 4 bedroom house that she can't sell at the moment and she hasn't the money to maintain it. I'm sure she's not alone in that situation. We have been talking and talking about equity release and we are getting TOTALLY confused and the percentage they want is CRAZY. My mum is marginally disabled and 71 years old so needs equity to last her life.

The best offer she had on her house in Frodsham was £370,000, from a property developer but we know it's worth £435,000 (which it's on for). No point selling for that coz she needs a home and money to live on!

HELLLLPPPPP!! What's best to do when you have equity?

Thanks
Sarah.

[Deleted User]

I am not a big fan of equity release. If it were me, I would consider taking the £370K and downsizing to something half that price.

VIGILANT22

sarahpilates wrote: »

My mum has a 4 bedroom house that she can't sell at the moment and she hasn't the money to maintain it. I'm sure she's not alone in that situation. We have been talking and talking about equity release and we are getting TOTALLY confused and the percentage they want is CRAZY. My mum is marginally disabled and 71 years old so needs equity to last her life.

The best offer she had on her house in Frodsham was £370,000, from a property developer but we know it's worth £435,000 (which it's on for). No point selling for that coz she needs a home and money to live on!

HELLLLPPPPP!! What's best to do when you have equity?

Thanks
Sarah.

) You have to ask friends/family/colleagues to refer you to a mortgage adviser they have used and have been happy with. If they're not qualified in ER they should be able to refer you to someone who is.
They will then explore options..It could be she could drawdown some income at this point but still have the option to move and downsize in the future.
This is a very specialised area, you will find a lot of "lay" people think they understand it and will give you information/opinions...Most of the time these opinions/infomation are way off the mark.

Start by reading here http://www.ship-ltd.org/default.aspx
SHIP stands for Safe Home Income Plans and is good news for consumers looking into Equity Release..they are not the lenders
It is a code of conduct launched in 1991 the main aim of which is to protect consumers when taking out an equity Release deal. Companies subscribing to the SHIP Code of Practice undertake to provide a fair, simple and complete presentation of any home income plan they may offer you........:)

Annisele

If the house is on the market for £435k but won't sell, then I'm afraid it's entirely possible that it isn't 'worth' £435k at all - a cliche I know, but it's only worth what somebody else is willing to pay for it. How long has it been on the market at £435k? Any viewings/offers?

I'm not a great fan of equity release either, but for the right client it can be by far the best option. But if it isn't suitable, it can be a disaster. There's no one answer to "what's best to do when you have equity"; it sounds as though it would be a good idea for your mother to discuss her finances with a qualified adviser.

There are options other than equity release (and a good adviser will discuss them with her; they won't just sell her an equity release plan). Has she considered renting out the 4 bedroom house and then renting a smaller one herself? Could she take lodger(s)?

Is her problem just that she doesn't have the money to maintain the house, or is she having financial difficulties in general (eg with a mortgage)? If the house needs specific work doing to it, is she eligible for any grants (or would it be worth increasing her mortgage loan to do the specific work, if the problem is preventing the house from selling)? Is she claiming all the benefits she is entitled to? Is her problem that she's been living off income from her capital, and that income has dried up?

Tallulah9360

My in-laws are currently trying to get out of an equity release they did 6 or 7 years ago as the amount they now owe is absolutely crazy and if they let it run it will swallow all the equity for a relatively small loan. I really would advise only considering this as an absolute last resort if you are really desperate. Can you push the developer for more or for a share in the profits when he sells? The difference between what you think the house is worth and the offer you've had could easily get swallowed up by an equity release in a couple of years depending how much she took out. As things stand she could downsize now and get somewhere nice due to current prices but if she releases equity and then has to downsize in a few years when the market may have gone back up she will have a much smaller pot to play with against higher prices, and whoever she borrows from will have made a killing. PLus the legal costs of getting out of it when you sell are horrific.
Personally I'd rather give the developer a good deal than make a faceless corporation and the lawyers even richer but that's just my opinion!