Equity release schemes.

Justindebt

We went to se the onsolvency practioner the other day.

As I suspected, we have too much equity in the house to make an IVA advisable.

And bankruptcy is out of the question.

Now, we reckon there is about 300K equity in the house.

He advised us to only sell as alast resort because he thinks our house is in an area in which house prices will grow yet more over the next few years.

He said we shouyld raise what we can against the house by way of re-mortgaing....and even seeing if a family member or close friend would be interested in taking an equity share of the house.

He said it would be a good investment for them.....though I'd prefer not to do it.

But his point is quite valid.

Prices around here have shot up 100K in the past eighteen months.....if we can hold on for another two years and ten months our existing mortgage is cleared and we could well have the hundred grand needed to repay anything we borrow now to bail us out, letting the house get us out of trouble.

But I have been wondering about equity release schemes.

The Abbey, with whom we have our mortgage, don't do it.

Dose anyone know of any companies which specialise in equity release schemes?

Thank you.

lynzpower

Be very very careful with this. I do wonder about this bit

He advised us to only sell as alast resort because he thinks our house is in an area in which house prices will grow yet more over the next few years.

I worry about this bit. How does the IP know what the markets doing, even the bank of england arnt making statements like this, in fact they are looking to increase interest rates to deflate the property market as prices are spiralling up. Id be very wary. You say his point is quite valid, Im not sure it is, sounds a bit chrystal balling to me.

I dont know a lot about equity release schemes, but you might want to pose the same question on the property board.

How much is is your house worth, how much do you owe?

Good luck with it, never easy is it?

Justindebt

Well, I agree no one knows about where house prices are going but it is a fact that supply cannot keep up with demand these days so even if they aren't to keep rising at the present rate, it is hard to see how decent houses in desirable areas would fall significantly in value, if at all.

The thing is, even apart from any rise in the value which may or may not occur, we have an endowment ploicy which is on track to clear the existing 60k mortgage and as I say, that mortgage free day is now less than two years and ten months away.

That in itself would take care of 60% of the debt if we sold the house at that point.

Which is why I am looking for information on equity release schemes.

If we sell now, then any profit we make will automatically be minus 60K.

MrsTinks

There is no guarantee that the housing market won't crash... Infact it HAS to crash even if it isn't an earblasting thunderous crash but a slow slide down a gravel path. Both will hurt!

Sell now and pay off your debts and have a healthy deposit for somewhere else. It'll be a fresh start and a scenario where yes you have a mortgage, but you will be in control and can afford to pay all your bills etc.

Sell part to someone else on the grounds that SOMEONE thinks it'll be worth more is no better than sticking money in the stockmarket with little or no research. You'll also not be able to make decisions yourself about when to sell and so forth as you will be affecting THEIR investment. See where this is going?

Release equity... sorry I'm just not a fan of these...

Then again you're pretty close to the end of the mortgage but looking at it then what you don't owe on the mortgage you owe in other debts if that makes sense?

Justindebt

Not really, but I take the point you are against equity release schemes.

The fact is if I had sold the house a yeara ago I would have taken 100K less for it.

So, I really feel I am on a no lose situation.

The neccessary equity is already priced into the house, so I can proceed down that road from a position of relative strength.

Now, I don't want to appear ignorant here, but the reason I started this thread wasn't to debate th rights and wrongs of hanging on to the house, because I am determined, as is my wife, to see out the next three years and take it from there.

We are even considering moving abroad at that time.

I am merely asking if anyone can point me in the direction of any mortgage lenders who operate this scheme.

lynzpower

http://forums.moneysavingexpert.com/showthread.html?t=226207&highlight=equity+release

http://forums.moneysavingexpert.com/showthread.html?t=210888&highlight=equity+release

I do agree with Tine, securing your debt isnt sometihng that i would feel comfortable advising about, especially in the current climate, but heres a couple of threads I found on a search for you

Broken_hearted

I don't believe in equity release its just a way of getting you house for bot all.

Floss

thing is, you won't have lost the £60k, keep paying your endowment premium & you will get the payout, not the mortgage co! so in just under 3 years you will have £60k in your hand.

Justindebt

Good point, Floss....and we have considered that.

Thanks for those links, Lynz.

gallygirl

Another thing to consiser - the equity release schemes seem so punitive that the increase in value would proabbly be going to them anyway.

If you are thinking of moving abroad you don't see your long term future in the property. If I was you I'd be inclined to sell now and clear debts. DK how high your mortgage is - is it just the 60k?

If you have 300k equity I assume value to be 360k? You could clear mortgage and all debts and presumably buy something small - remember your future is not here. Or keep mortgage and buy slightly bigger place that needs work, and improve value. Then in 3 yrs sell up, ALL the profit is yours, plus your endowment, plus all the money you'll have saved (presumably you could save a substantial amount in that time if not chucking it a debts????)

Just a thought!

lynzpower

Also if you have somewhere in the region of 250k to put in the bank ( justy guessing at the figures here BTW) if you sold up now, and rented on your income & cleared your debt, thats a significant return even in a bog standard savings account from the banks. Makes sense to get THEM to pay YOU for once