Help please - equity release

WarriorPrincess

My oh's very elderly father has Alzheimer's and is cared for by resident carers in his own home. This is expensive - but what 24-hour care wouldn't be. He has a good pension income but his capital is now down to about £15k - plus a house worth hundreds of thousands.

My oh & another family member share enduring power of attorney and will need to raise money on the property at some point soon to continue paying care costs.

We need to know who to go to and how to go about equity release on the house, what to avoid, what the pitfalls are, etc. Is this the right part of MSE to ask this, or is there a more appropriate area? And can anyone give us any pointers?

sleepless_saver

I'd start off by having a look at the SHIP site.

I guess you'd want an equity release option where you can draw down funds as needed instead of a lump sum all at once. This will preserve the capital for longer.

dunstonh

We need to know who to go to and how to go about equity release on the house, what to avoid, what the pitfalls are, etc. Is this the right part of MSE to ask this, or is there a more appropriate area? And can anyone give us any pointers?

https://www.unbiased.co.uk is the Uk database for IFAs. If you type in the postcode and area of advice you need (equity release is listed) it will take you to a second filter page where you can fine tune any options and then do a search. It will then list the nearest IFAs that are both authorised and choose to transact in equity release. Its a niche area. So, dont expect all IFAs to do it. However, the list will show those that do.

Cautious_Investor_3

Hi

I couldn't agree with the other posters more, you really must take advice on this most complex and emotional of areas.

Unbiased is a great place to find an IFA, you might also want to have a word with the care home, other families of residents will have gone through the same problems and may well have used an IFA.

I hope you manage to get this problem sorted satisfactorily.

The Cautious Investor

Loughton_Monkey

Although I'm not necessarily suggesting it, selling the house should be considered. It is often considered to be the most 'financially efficient' form of equity release. But I can also see some disadvantages - including psychology/sentiment. Also, many people would forsee houses rising much more than current 'savings' investments over 5 years+ from now.

Just another thought - when considering the types of Equity Release, take into account what happens when he dies. Ask about this specifically regarding what would happen if death were to occur, shortly, medium term, or longer term. And as has been said, if you go for "Lifetime Mortgage", definitely take a 'drawdown' one and not the 'full' lump sum.

Cautious_Investor_3

Loughton_Monkey wrote: »

Also, many people would forsee houses rising much more than current 'savings' investments over 5 years+ from now.

This may well happen, but how likely is it?

If interest rates rise the housing market will be hit as people struggle to pay their mortgages, this, compounded by higher unemployment will not create the conditions needed for house prices to rise.

I hate to be negative but I'm pretty bearish about house prices over the next five years. I really do think that they will stay stable at best and perhaps even fall, which is not bad news for all especially first time buyers.

The Cautious Investor

sleepless_saver

Loughton_Monkey wrote: »

Although I'm not necessarily suggesting it, selling the house should be considered.

My first thought too, but in this case he is actually living there with resident carers rather than being in a care home.

Loughton_Monkey

Cautious_Investor wrote: »

This may well happen, but how likely is it?

If interest rates rise the housing market will be hit as people struggle to pay their mortgages, this, compounded by higher unemployment will not create the conditions needed for house prices to rise.

I don't know how likely. It's just my opinion. 5 years is a long time and I would expect houses to have recovered at least enough to allow builders to get back in the market. If not, they will be dead by then.

magpiecottage

I agree with DunstonH on this.

It is not an easy call. From what you say, though, Home Reversion (what Loughton Monkey refers to) seems to carry a relatively high risk.

It is less likely to provide a drawdown facility and you will only receive part of the property's true worth. If, as seems likely with Alzheimer's, he needs to move into a residential home in due course, the house will be sold by the provider and the proceeds kept by it (or at least its share of the proceeds).

If that happens quickly it will have been a very expensive option.

By contrast, if you take a mortgage, the house would be sold, interest repaid and any surplus would be available. It might of course then be used for care costs but that would give you a little extra say about where he went and what care was provided and possibly mean there was a little left over at the end.

I am afraid, though, you have some tough decisions to make.