Property Income Plan and Equity Release

Penfold12

Ian_W wrote: »

Now remind me, who was it said "don't invest in things you don't understand"?

Sounds more like a scam than a scheme, for that reason, I'm out!

I wholeheartedly agree with not investing in things that arent fully comprehended.

To understand the plan fully, we are waiting for the first set of contracts to come out so that they can be studied and examined.

Personally I am reserving judgement until then.

Penfold12

ygjeeves wrote: »

I tend to agree, my parents have been approached by an ifa offering this and it sounds far too good to be true. I'm going to go to a seminar with them and see what's said but my gut instinct is don't touch with a bargepole.

I will be honest. When I was approached to promote the product, I veiwed it with so much scepticism, that the I binned the first 4 emails about it.

My mind is now open to the idea, but I too, have questions regarding the moral dimension of the product. After all, look at what happened to AIG in the US. I personally wouldnt want to part of anything that could cause someone to lose their house.

Personally, I would base my descision, after an independent solicitor examines the concept and contract.

I would like to thank everyone for posting, please dont construe this as a ruse for me to promote the product within the forum. I am trying to inform, and gain an insight into opinions from other users, further opinions would be fantastic.

sleepless_saver

1. If the insurance company goes bust, presumably the part of the house they have the charge on is counted among their assets and so available for distribution to creditors.

2. It would be interesting to know what % the IFA gets in all of this.

Linton

sleepless_saver wrote: »

1. If the insurance company goes bust, presumably the part of the house they have the charge on is counted among their assets and so available for distribution to creditors.

It appears not - reading the initial description the insurance company taking the tranche also takes out an insurance policy with another insurance company to cover the cost.

But that does sound rather like what the banks did with their dodgy loans.

Penfold12

sleepless_saver wrote: »

1. If the insurance company goes bust, presumably the part of the house they have the charge on is counted among their assets and so available for distribution to creditors.

2. It would be interesting to know what % the IFA gets in all of this.

1. For the charge to be counted as an asset, payments by the insurance company must be continuously made. The minute they stop, the charges are automatically released. Unless the rules have changed, my understanding is that the minute a company goes into liquidation, all payments made by that company cease.

There could be an argument, that the administrator may continue to make payments, thereby keeping the charges as assets, however, if that were the case, I would expect that the property owners to be giving notice and paying their 3 month exit fee and releasing their charges.

The insurance of the charge, plays a part, but I am unsure as to how it operates specifically. This is a question that I am awaiting an answer to.

2. The fee involved for the IFA, and their introducers is 3% of the charge value. I am sure that they are supposed to disclose this to the client.

It is certainly a chunky fee, but the IFA does lose part of that fee to the introducer and compliance.

For the benefit of doubt, I am meant to be an introducer, and would not get anywhere near the 3% fee!

Penfold12

Linton wrote: »

But that does sound rather like what the banks did with their dodgy loans.

Indeed. There is the moral dilemma I am facing!

The manner in which this operates, I am sure has been scrutinised, but I would be much happier seeing the results of that, and maybe one of the insurance companies coming out and making a statement.

Shimrod

I've got to confess I'm struggling to get my head around this! Using the example of the £400K house above, in return for no investment, no risk you would get £10K pa for three years. The only downside is you have to give three months notice to get out of the agreement.

The closest thing I can relate this too is the lending of shares to someone who is going short on them - they pay a 'rent' so they can sell the shares they haven't got. Except this seems more complicated.

Penfold12

Someone did say to me that 5% return wasnt that great, however, his next sentence was, that considering no money was being put up, and the risk involved was minimal, it was actually a good return.

chris_m

Shimrod wrote: »

I've got to confess I'm struggling to get my head around this! Using the example of the £400K house above, in return for no investment, no risk you would get £10K pa for three years. The only downside is you have to give three months notice to get out of the agreement.

I don't understand it either - that example implies that you get 10K pa for 3 years, a total of 30K. In return you lose 200K if you wish to sell the house, or your estate does.
That doesn't sound a very good deal, no - or is the charge only temporary?

Shimrod

Interesting. We've gone from this:

Blueshell_PIP wrote: »

What are the risks involved?

Put bluntly, for the property owner, none whatsoever. .

To this:

Blueshell_PIP wrote: »

Someone did say to me that 5% return wasnt that great, however, his next sentence was, that considering no money was being put up, and the risk involved was minimal, it was actually a good return.

So where is the risk coming from?

And going from your user name, I assume you are related to the blueshell group, in which case I'm pretty certain you shouldn't be using your company name as part of your user id without approval from the website first.